Tesla Leads in Profit Per EV

Tesla has built a commanding lead over most major rivals in profit per vehicle, according to a Reuters analysis of industry data.

Its research shows Tesla earned $15,653 in gross profit per vehicle in the third quarter of 2022—over double that of Volkswagen AG, four times Toyota Motor Corp., and five times more than Ford Motor Co.

Over most of 2022, Tesla joined rivals in raising prices on popular vehicles as shortages of semiconductor chips and other materials limited production. Companies trained their focus on higher-margin models and booked strong profits as sales volumes fell.

Later in the year, Tesla reversed course and dropped its prices. The company leveraged its production-cost advantage to give price cuts that challenged the profit-over-volume strategies of legacy automakers.

Tesla has invested in advanced manufacturing technology to lower its production costs. The automaker also brought battery manufacturing and other parts of its supply chain in-house, and standardized vehicle designs to improve economies of scale.

“Tesla has taken the nuclear option to bully the weaker, thin margin players off the table" in China, said Bill Russo of Automobility, an industry consultancy in Shanghai. "Big pie, fewer slices, more to eat for those that remain.”

Originally posted on Auto Dealer Today