Gross margin rises to 20%, COGS declined to lowest level ever, about $35K
Cybertruck is profitable already (!) and 3rd best selling BEV in US.
Free cash flow of $2.7B, leaving $33B in cash on hand
20% increase in superchargers
50% increase in energy storage revenue
On track for launch of cheaper models in 2025
In addition, the Model Y returned to being the best selling vehicle of all types in Europe for September despite rumors of a new, improved version arriving in a few months.
Even more remarkable IMO is that the Model Y was the best-selling BEV in China for the first half of 2024 despite the enormous competition.
Tesla beat BYD in global BEV sales for the quarter, 462,890 versus 443,426.
a. this article was from a year ago
b. Just because, mathematically, 33% of a vendors products are sold below the average cost, this doesn’t mean anything. High priced cars that cost a lot to make push the average up but may have ~nothing to do with the cost or selling price of the low end.
Mr. Market was also impressed, up 22% for the day. Margins improved because cost of goods sold (COGS) keeps on dropping. The machine that builds the machine gets better all the time.
That was to be expected. The price of a Model 3 in China is about $32K USD. Tesla is not competing in the lower price brackets where one would expect most car sales to be. Tesla is not interested in racing to the bottom by making cheap cars at low margin or even at a loss. The BYD Dolphin for example sells for about $17K USD in China. Hard to believe that could possibly be profitable to BYD.
Tesla’s strategy has always been to make a few models really efficiently where the primary differentiator from the competition is the software. In China that differentiator will be FSD that Tesla believes is far superior to anything the China companies currently have. Elon himself has said that one should only own Tesla stock if one believes in FSD.
It will be interesting to see what happens to Tesla demand in China when FSD is introduced in 2025.