{"id":1135424,"date":"2023-02-05T10:10:33","date_gmt":"2023-02-05T15:10:33","guid":{"rendered":"https:\/\/bugaluu.com\/news\/visualizing-teslas-unrivaled-profit-margins\/1135424\/"},"modified":"2023-02-05T10:10:33","modified_gmt":"2023-02-05T15:10:33","slug":"visualizing-teslas-unrivaled-profit-margins","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/visualizing-teslas-unrivaled-profit-margins\/1135424\/","title":{"rendered":"Visualizing Tesla’s Unrivaled Profit Margins"},"content":{"rendered":"
\"\"<\/a><\/div>\n

Visualizing Tesla’s Unrivaled Profit Margins<\/span><\/p>\n

\n

In January this year, Tesla made the surprising announcement that it would be cutting prices on its vehicles by as much as 20%.<\/p>\n

While price cuts are not new in the automotive world, they are for Tesla. The company, which historically has been unable to keep up with demand, has seen its order backlog shrink from\u00a0476,000<\/strong>\u00a0units in July 2022, to\u00a074,000<\/strong>\u00a0in December 2022.<\/p>\n

This has been attributed to Tesla\u2019s robust production growth, which saw 2022 production increase\u00a041%<\/strong>\u00a0over 2021 (from 930,422 to 1,313,851 units).<\/p>\n

With the days of \u201cendless\u201d demand seemingly over, Tesla is going on the offensive by reducing its prices\u2014a move that puts pressure on competitors, but has also angered existing owners.<\/p>\n

Cranking up the Heat<\/h2>\n

But, as Visual Capitalist’s Marcus Lu details <\/a>below, Tesla\u2019s price cuts are an attempt to protect its market share<\/strong>, but they\u2019re not exactly the desperation move some media outlets have claimed <\/strong>them to be.<\/p>\n

Recent data compiled by\u00a0Reuters<\/a>\u00a0shows that Tesla\u2019s margins are significantly higher than those of its rivals, both in terms of gross and net profit.<\/p>\n<\/p>\n

Our graphic only illustrates the net figures, but gross profits are also included in the table below.<\/p>\n

<\/a><\/p>\n

Price cutting has its drawbacks, but one could argue that the benefits for Tesla are worth it based on this data\u2014especially in a critical market like China.<\/p>\n

\n

Tesla has taken the nuclear option to bully the weaker, thin margin players off the table.<\/p>\n

\u2013 BILL RUSSO, AUTOMOBILITY<\/cite><\/p>\n<\/blockquote>\n

In the case of Chinese EV startups\u00a0Xpeng<\/strong>\u00a0and\u00a0Nio<\/strong>, net profits are non-existent, meaning it\u2019s unlikely they\u2019ll be able to match Tesla\u2019s reductions in price. Both firms have reported year-on-year sales declines in January.<\/p>\n

As for Tesla,\u00a0Chinese media outlets<\/a>\u00a0have claimed that the firm received 30,000 orders within three days of its price cut announcement. Note that this hasn\u2019t been officially confirmed by anyone within the company.<\/p>\n

Tit for Tat<\/h2>\n

Ford<\/strong>\u00a0made headlines recently for announcing its own price cuts on the Mustang Mach-E electric SUV. The model is a direct competitor to Tesla\u2019s best-selling Model Y.<\/p>\n

Chevrolet<\/strong>\u00a0and\u00a0Hyundai<\/strong>\u00a0have also adjusted some of their EV prices in recent months, as listed in the following table.<\/p>\n

\"\"<\/a><\/p>\n

Source: Observer (Feb 2023)<\/em><\/p>\n

Volkswagen is a noteworthy player missing from this table. The company has been gaining ground on Tesla, especially in the European market.<\/p>\n

\n

We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands.<\/p>\n

\u2013 OLIVER BLUME, CEO, VW GROUP<\/cite><\/p>\n<\/blockquote>\n

This decision could hamper Volkswagen\u2019s goal of becoming a dominant player in EVs, especially if more automakers join Tesla in cutting prices. For now, Tesla still holds a strong grip on the US market.<\/p>\n

\"\"<\/a><\/p>\n

Thanks, Elon<\/h2>\n

Recent Tesla buyers became outraged when the company announced it would be slashing prices on its cars. In China, buyers even\u00a0staged protests<\/a>\u00a0at Tesla stores and delivery centers.<\/p>\n

Recent buyers not only missed out on a better price, but their cars have effectively depreciated by the amount of the cut. This is a bitter turn of events, given Musk\u2019s 2019 claims that a Tesla would be an appreciating asset.<\/p>\n

\n

I think the most profound thing is that if you buy a Tesla today, I believe you are buying an appreciating asset \u2013 not a depreciating asset.<\/p>\n

\u2013 ELON MUSK, CEO, TESLA<\/cite><\/p>\n<\/blockquote>\n

These comments were made in reference to Tesla\u2019s full self-driving (FSD) capabilities, which Elon claimed would enable owners to turn their cars into robotaxis.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSun, 02\/05\/2023 – 14:30<\/span><\/p>\n

From:Zerohedge<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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