Tesla's Profit Margins Blow Sandy Munro Away

Tesla's Insane Profit Margins

Sandy Munro is blown away by Tesla's profit margin in comparison to other auto makers, especially Toyota. Tesla is now profitable selling only EVs.

Legacy auto makers took their time transitioning to EVs due to the fear of losing money. But that fear is now costing them. Tesla earns about 8 more profit per vehicle than Toyota. After all these years, Toyota has a firm grasp on building gas cars. It has a good lineup of fuel efficient gas cars, some of which are hybrids.

Tesla produced just 4 fully electric models and the newly launched Tesla Semi. Those vehicles are the well known Model S, Model 3, Model X, and Model Y. The Tesla Cybertruck will come to market next year in 2023.

Tesla has proven it can turn a consistent profit for the last two years. There is plenty of free cash flow for Tesla as well, with Tesla having over $3 billion in free cash flow in Q3, 2023.

How is Toyota and any other legacy auto maker for that matter, going to compete with Tesla when the world is transitioning to EVs. I think it's going to be very difficult for them. They lead the world in gas car production, but those are dying and going away.

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Where Other Auto Makers Compare to Tesla

Tesla out paces Toyota in profit per vehicle and it's not even close. Here are some statistics for the 3rd quarter of 2022:

Toyota:
* 2,625 thousand sales
* $3,342 billion overall net profit
* $1,273 profit per vehicle

Tesla:
* 344 thousand sales
* $3,292 billion overall net profit
* $9,754 profit per vehicle

That's a near 9x profit per vehicle for Tesla. Net income between the two companies is the same, despite Toyota making about 8 times as many vehicles. It's definitely paying off for Tesla for them to reduce costs and improve their vehicles over time.

Gross margins for the Model 3 and Model Y in China are at 30% or more, even with the reports that production is slowing down in China. Those reports are yet to be confirmed by Tesla.

Will Toyota be able to catch up to Tesla? Is the world going to keep transitioning to EVs?

For more information, see this video from Infowealth:

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot