Does Tesla Really Lose $4,000 Per Car?

Excellent article that dispels the liberal myth that Tesla is an unprofitable company that is dependent on subsidies.

Although California offers a $2,500 rebate per electric car, this is just a tiny fraction of the sticker price for a Tesla, and the people who are buying are not doing it for the subsidy but instead to project status and for the high performance of the car.

Tesla has profit margins of 25% per car, and similar to the Amazon business model, Tesla is reinvesting its profits to build its infrastructure. Wall St. is aware of this, which is why no one cares that Tesla is cash flow negative.

There is a big difference between losing money for every car sold and spending more money than you make. Considering the profit margin on the Model S is over 25%, Tesla is actually in the latter category. Making the Model S is profitable. Rapidly expanding into a major car manufacturer while making the Model S is not.

*Edit: look at it this way. You want to open a McDonalds. It will cost you $500,000, which you borrow from a bank. The first year you bring in a million dollars in revenue, and make $100,000 profit from sales. However, you borrowed and spent $500,000 opening the store, which means you sort of lost $400,000 that first year.

Would Reuters say you lose $2.00 for every Big Mac sold? I guess so.

The left is so desperate to see Tesla fail, but keep coming up empty-handed each time. Whether it’s imagined regulatory issues or ‘exploitation’ of its drivers, the same for Uber, which keeps defying the left’s insistence that it’s a bubble. All these companies keep rising in value year after year, as their businesses continue to grow despite all the doom and gloom from the media.

Comments are closed.