It’s likely a combination of more than two things. Which is why we can’t conclude from their profit margins that they’ve made any groundbreaking accomplishments in reducing manufacturing costs.
People quite correctly point to the several advantages Tesla has in the market - and a consequence of those advantages will be some benefit to Tesla’s profit margin. Tesla doesn’t advertise - which savings drops directly to the bottom line. Tesla doesn’t have dealers - same. Tesla sells very expensive software packages (up to $15K on FSD and $6K for Enhanced Autopilot), and has a high enough take rate on them to be material. And Tesla still has extra pricing power from its early lead into a still supply-constrained market.
The thing is, those advantages could plausibly be enough to account for most of Tesla’s superior profit margins. Not advertising drops 2% to the bottom line. We don’t know the specifics of their software revenues: while about 300K bought FSD (which at $15K would be 3.2K per car sold in 2022), not all of them paid $15K and not all in 2022 and not all that revenue is booked. Then again, that doesn’t include EAP sales. But even if it’s only 2K per car, that’s still about 4% of nearly pure margin. Dealer fees run 2-5% in the ICE world. Having the U.S. market nearly all to themselves is probably worth another few points in pricing margin.
Depending on where those advantages actually land, they’re plausibly big enough to explain nearly all of the 10-15 points of Tesla’s margin gap with other automakers. Sure, maybe they have a few points of margin from manufacturing costs - though even then, some amount of that will also be due to the fact that all of their factories are nearly-new, not necessarily that the factories contain any particularly innovative or groundbreaking techniques that reduce costs.
Might their factories be somewhat more cost-effective (apart from being newer than average) due to innovation? Sure, maybe. But given the likely size of their margin advantages from the other factors mentioned above, it’s probably not even the biggest contributor to their margin lead, and possibly not even a material one.