Gross margin doesn't give you the full picture. SG&A (20% of sales) eats most of that margin and R&D is 12% of sales. I'm not sure how profitable Tesla could be cutting this additional costs without going too far (to avoid compromising the viability of the company).

If they were just going to churn out Model S and X, they wouldn't need to do much R&D. They could have a handful of people sit around and draw new headlight designs like the other car companies.

For a luxury car, that's not really good. As you move down-market, margins only get lower, so you have to rely on volume to make significant amounts of money. If people don't buy Model 3's by the hundreds of thousands every quarter, they are going to have problems squeezing profits from this car.

Legacy luxury margins.

BMW: 8%

Mercedes: 11%

Audi: 7%

Gross margins are significantly higher than that (maybe below Tesla's 25%, but they sell many cars cheaper than the model S).

So a company that has widening losses claims a 25% margin on its cars. Sounds like some interesting accounting is at work.

Ask Bob Lutz whether margins are greater on a Chevy Camaro or a Cadillac ATS (exact same platform, one sells for about $10k more than the other).

Seems like you're missing the point. If a set of parts costs you X, and you can sell it as one product for 2X and as a different product for 3X, which one yields better profits?

We're not talking past each other. A Cadillac and a Chevy are much closer to parity than a Model 3 and a Model S/X (considering both parts and manufacturing techniques). I don't know what the Model 3 margins are yet, but I'm confident they're going to be above 15%.