Colsla
Member
a lot of people are worried about margins, but i think it won't be that bad. Their margins were fine before the big price hike .. and they have more economies of scale now than before. Margins will suffer while Berlin and Austin ramp up.. but I think Tesla will surprise people with not so bad margins.In a sales pool that is arguably shrinking as we head into a recessionary period, Elon seems to be doing a strategic move by trying to capture a larger portion of it through aggressive pricing. He can afford a larger margin haircut than KIA, Hyundai, GM etc... whom either sell at a loss or barely earn a profit on their EVs today. This positions the OEMs in a tight spot, where if forced to lower prices, they will have less cash to reinvest into their EV program... if they don't lower prices, the value proposition of their cars becomes challenged with the risk of market share loss...
So while TSLA margins are compressed, it may be generating sufficient cash that can be used towards improving their cars. Post recession, say 2024/2025, Tsla will hopefully come out the other end ahead relative to the incumbent OEMs
Tesla is in a great position to grab a big portion of an ever growing EV market ..!!