Re:Tesla drops cheapest Model X, S variants, cuts prices to ...
by marvin on Tuesday July 16, 2019 @12:02PM
(#20451293)
I've heard process inefficiencies in their current manufacturing pipeline held as a criticism against Tesla. But while it's less ideal than having all the inefficiencies worked out already, I consider this _promising_. They have produced S&X at around 25% gross margin up until now, IIRC. If there is still relatively low-hanging fruit to be picked, that is another line of defense against being undercut by the competition.
As long as a significant part of that gross margin can be put back into capital expenditures (developing new vehicles and infrastructure, developing more manufacturing capacity), things are looking bright for continued EV development and adoption regardless of what the incumbent manufacturers are up to.
At then end of January, 2019 they were selling a 270 mile range Model S, 0-60 in 4.2, without AP, for $85k. Today for $80k you get 370 miles of range, 0-60 in 3.7, with AP.
Obviously the question on everyone's mind is, what are the gross margins? If these are strictly process improvements which are fully maintaining margins, then it is extraordinary progress in 6 months. I would expect that there is some combination of process improvements, technology transfer from Model 3 -> S/X, and at least some margin erosion, particularly as the Federal tax credit continues to wind down.
The TM3P for $54,900 is truly an absurdly low price for that level of performance. I'm somewhat shocked it's not at least $57,990, but I understand what they're doing -- it's almost pure margin for them when they get an upsell from LR-AWD to Performance, so the more they can shift the mix to performance the better.