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Tesla's profit per vehicle beat the world's most valuable car brand eightfold

Tesla is earning about US$10,000 per car
Tesla is earning about US$10,000 per car
Toyota made about US$1,200 per vehicle sold last quarter, and Tesla made eight times that, beating Toyota's net profit margin for the first time since it went public. Teslas cost about US$36,000 to make but sell for US$10,000 more on average, potentially beating the heretofore highest per-vehicle margins of Mercedes.

While Toyota is still the most valuable car brand and has been such for a good while, the intrinsic value of its name climbed roughly in sync with the global inflation rate in 2022, while Tesla's brand value increased at thrice the rate to sit at US$48 billion. Not only is Tesla now the third most valuable automotive name, but the merit of its badge was up the whopping 32% year-on-year buoyed by both increased brand recognition and a market capitalization boost riding on the wings of its record profit margins that beat Toyota's eightfold.

A Tesla exec basically confirmed not long ago that its cars cost US$36,000 to make on average in parts and assembly, while selling for about US$10,000 more, making it the world's most successful automaker in that respect. Needless to say, a Model S Plaid or a Model X will cost more to build than the humble Model 3 that starts from a US$46,990 MSRP, but the gross margin on all vehicles across Tesla's portfolio sits at the very healthy nearly 30%, with only a few companies like Apple that actually make products sitting higher in that respect.

In fact, Elon Musk recently mentioned that at the rate things are going Tesla would be able to produce its hotly anticipated Model 2 mass market EV at half the cost of the current Model 3 platform and might one day hit market capitalization higher than "Apple and Saudi Aramco combined."

Granted, Toyota is the world's biggest automaker with a huge portfolio and unit production exceeding that of VW, let alone the puny output of Tesla, but its market cap takes second place behind Tesla. Last quarter, Tesla managed to earn slightly more money than Toyota for the first time, at US$3.29 billion versus $3.15 billion, despite the Japanese company shipping seven vehicles to market for one Tesla.

That's due to the "frankly embarrassing" as per Elon Musk's parlance Tesla car prices when compared to the cost of goods sold item in its balance sheet. Toyota's profit per vehicle was about US$1,200 this past quarter, while Tesla's was eight times higher at roughly US$9,570. This might be more than the net profit  margin per vehicle of the "world's most valuable luxury car brand," as Mercedes-Benz described itself.

Toyota has bigger earnings potential than that, of course, and in fact its operating profit was higher than Tesla's but it had to wind down its operations in Russia and assist its suppliers with their electricity costs. It, however, has been brought to the new era kicking and screaming with a relatively slow adoption of an electric-only strategy that only recently pushed out the first vehicle on the Toyota bZ4X platform.

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Source(s)

Nikkei (paywall)

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> Notebook / Laptop Reviews and News > News > News Archive > Newsarchive 2022 11 > Tesla's profit per vehicle beat the world's most valuable car brand eightfold
Daniel Zlatev, 2022-11- 8 (Update: 2022-11- 8)