Guosen Securities: Tesla’s China Model Y has 29.4% gross margin: report

[Hamartia Antidote]

Tesla's China Model Y has 29.4% gross margin: report

Tesla's Giga Shanghai-produced Model Y crossover has a 29.4% gross margin, around three-times higher than the industry average.

www.teslarati.com

Tesla’s new Giga Shanghai-produced Model Y has a 29.4% gross margin, according to Guosen Securities, who analyzed the cost of building the car compared to its selling price.

According to the Shenzhen, China-based financial firm, Tesla’s China Model Y only costs ¥237,930 (USD 36,852) to produce. However, its selling point gives Tesla a 29.4% gross margin with a price of ¥339,900 (USD 52,646.25). Due to the current demand for the all-electric crossover that just started being produced at Giga Shanghai, Tesla has plenty of room to come down. The company will likely do this after the demand is sustained for several months because the automaker did the same thing with the Model 3 after its initial gross margin was also turning Tesla a tasty profit.

Tesla’s gross margins for the Model Y are around three-times the industry average, which hover between 8-10% for luxury cars. This means Tesla is making around three times the amount of money per unit compared to any other carmaker. While demand continues to remain healthy for Tesla’s cars based on 2020 sales figures, the company is churning plenty of profitability from its Giga Shanghai-produced cars.

In June 2020, it was reported that the Model 3 SR+ that was delivered by Tesla in Q1 had a gross margin of 39.37%. This means that with its ¥271,550 price tag (USD 42,059.69), the vehicle actually cost ¥188,700 to produce (USD 26,653), Sina indicated.

The price of the Model 3 has decreased since the June 2020 report. Tesla’s base Model 3 in China now has a price of ¥249,900 (USD 38,706.38). This would be around a 24.5% gross margin if the cost to produce hasn’t changed. However, it likely has, and even if it hadn’t Tesla is still turning a profit that is more than 2.5 times the industry average.

In late December, Tesla China VP Grace Tao indicated that the company’s localization supply goal had been “basically” achieved. This effectively closed the door on the Model 3’s prices being reduced, which had occurred five times in the vehicle’s first year of availability in China. Once was due to the company’s desire to reach government incentives’ qualification, as the SR+ variant was reduced to under ¥300,000.

Reports from China indicate that demand for the new Model Y is healthy, and showrooms in the country with the largest automotive market were filled with prospective buyers just after launch.

China has been one of Tesla’s main contributors to its 500,000 vehicle goal, which the company announced it accomplished last weekend. While exact figures are unknown, the Tesla Model 3 has dominated Chinese EV sales figures for all of 2020. Data from the EV Sales Blog indicates that the Model 3 has sold 116,119 units in China in 2020 and has been battling with the GM-backed Wuling HongGuang Mini EV, which is the only close competitor to Tesla’s affordable sedan so far.

 

[S10]

That's quite a bit of profit margin. Usually luxury vehicles have anywhere from 10 to 15 percent margin.

Be sure to negotiate at the dealership.

 

[ozranger]

The scale of supply chain networks in China and the high availability of parts minimised the costs of this model's manufacturing.

 

[ZeEa5KPul]

What will blow @Hamartia Antidote's mind is that this is all going according to plan. China wants to build the best and most dominant NEV market in the world, and for that to happen its companies have to be competitive with the world's best. You don't get to be #1 by ducking the competition, so I welcome Tesla bringing its best into China - it will be beaten, just as all others have been beaten.

 

[F-22Raptor]

What will blow @Hamartia Antidote's mind is that this is all going according to plan. China wants to build the best and most dominant NEV market in the world, and for that to happen its companies have to be competitive with the world's best. You don't get to be #1 by ducking the competition, so I welcome Tesla bringing its best into China - it will be beaten, just as all others have been beaten.

I’m saving this comment for future reference. Tesla will dominate this decade, and holding you accountable will be delicious.

 

[casual]

I heard there was a steep import tax on teslas in China since tesla opted against going into business with Chinese partner even though production is in China.

 

[Hamartia Antidote]

What will blow @Hamartia Antidote's mind is that this is all going according to plan. China wants to build the best and most dominant NEV market in the world, and for that to happen its companies have to be competitive with the world's best.

I couldn't agree more.

As usual China's plan needs Western engineering/innovation to show them the way to becoming the best. We didn't need established Chinese EV car companies (like BYD) becoming #1 (or even #10) in our markets to show our companies how to start making competitive electric vehicle cars.

Of course who knows maybe your top selling EV (after the Model 3 for 2020) may dominate our markets.

 

[ZeEa5KPul]

As usual your plan needs Western engineering/innovation to show you the way to becoming the best. We didn't need Chinese car companies becoming #1 (or even #10) in our markets to show our EV companies how to make competitive electric cars.

Of course who knows maybe your top selling EV (after the Model 3) may dominate our markets.
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You think anything you said rattles me? What you said is true - China is still a developing country and America still has a marginal role to play in raising it to the next level. What should concern you is China is strong enough to compete against Tesla fairly. It should also concern you that China is scaring you this much while it's still developing - just imagine the power it will have when it completes its development. Imagine and shudder.

It's amusing that you need to resort to straw men to make your point. Compare the Model 3 to its Chinese counterparts:

But I think you have more important things than electric cars to be worried about now...

 

[Hamartia Antidote]

You think anything you said rattles me?

All I can say is the Chinese public have spoken. The BYD Han has been shipping to customers since July and has yet to surpass Tesla in any monthly sales. Same with the XPeng.

BYD could have been the company history books will mention as being the catalyst for the demise of the combustion engine car. Instead it will be Tesla.