Tesla’s lengthy document regarding overall performance in 2021 includes some juicy tidbits worth pointing out. The EV manufacturer claims it achieved the highest operating margin among all other volume automakers. In addition, the cost of goods sold (COGS) or the money spent to manufacture a car dropped to an average of $36,000 in the third and fourth quarter of last year.
However, it’s worth reminding you the prices for all its four cars have increased repeatedly in the last few months, which means Tesla is now making more money than ever for each vehicle it sells. Manufacturing costs should drop furthermore following the implementation of structural battery packs and large castings. Moreover, 4680 cells and extra cost-cutting measures will drive up the profits to new heights.
Tesla is perhaps the best example to demonstrate EVs can be profitable despite industry analysts saying it’s hard to achieve due to expensive batteries. The company mentions it was confident it would succeed thanks to “manufacturing innovation, purpose-built vehicles and factories [that] would solve cost concerns.”
However, COGS does not include every expense as distributions costs are not taken into account. In addition, marketing costs are excluded, although it’s a known fact Tesla has an anti-advertising strategy. While the bulk of the company’s sales is represented by the Model 3 and Model Y, both are considerably more expensive than the average sum spent to build a vehicle.
The Model 3 Rear-Wheel Drive, Tesla’s cheapest car, starts at $44,990 in the United States. As for the crossover, the Model Y Long Range begins at $58,990. Then there’s a big jump to the Model S ($94,990), followed by the Model X ($104,990). Speaking of pricing, head honcho Elon Musk said during the recent fourth-quarter earnings call the $25,000 car to slot below the Model 3 is not happening.
In fact, no new products will be launched this year since the Cybertruck, Semi, and the Roadster have all been pushed back until 2023 at the earliest.