> vs Toyota being an older and larger company with far more overhead due to an older and larger workforce.
Gross margin is net sales minus the cost of goods sold, hence doesn't include workforce cost.
I don't think that's right. From https://www.investopedia.com/terms/g/grossmargin.asp
"The Formula for Gross Margin Is
Gross Margin=Net Sales−COGS where:
Net Sales=Equivalent to revenue, or the total amount of money generated from sales for the period...
COGS=Cost of goods sold. The direct costs associated with producing goods. Includes both direct labor costs, and any costs of materials used in producing or manufacturing a company’s products."
It wouldn't surprise me if a lot of Tesla employees are compensated in large part via equity, therefore lowering their apparent labor costs. Also, they probably have lower health insurance costs for their relatively young workforce (they are more like a young tech company in this way).
Of course, battery prices will continue to decline, so in the long run, yes, EVs will be cheaper to buy, but I'm not convinced we are there quite yet. They are already far cheaper to operate, though.
I agree with all of this, but how can we be so sure that is the reason for:
> Their gross margin is 50% higher than Toyota's
vs Toyota being an older and larger company with far more overhead due to an older and larger workforce.
> Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV
Agreed, and I think deciding to make a real EV comes down to investing in battery production at this point. Subaru in particular is really losing the crown in its key markets like CA and CO to the new AWD EVs entering the market.