The Average Cost To Produce A Tesla Is Just $36,000

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The Average Cost To Produce A Tesla Is Just $36,000
© InsideEVs Tesla Giga Texas: General Assembly (Tesla Q4 2021 report)

In the last widely reported quarter of 2021, Tesla achieved the highest operating margin across all volume OEMs.

If you haven’t looked at Tesla‘s Q4 and Full Year 2021 Update, we’re here to tell you, there’s a lot to unpack. Add all the information revealed in the related conference call, and there’s enough news to fill up days, if not weeks. However, information related to Tesla’s vehicle production cost and operating margins should be getting more attention.

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In Tesla‘s annual report, it noted that it achieved the highest operating margin “across all volume OEMs” in Q3 2021. Tesla notes that it used Q3 since that’s currently the most widely reported quarter. Information about Q4 2021 is still coming in.

For years, skeptics argued that Tesla could never be profitable, EVs are “structurally unprofitable,” batteries are too expensive, and the list goes on. One of the main reasons OEMs are dragging their feet with regard to EV adoption is the massive costs involved.

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Tesla says it remained confident that innovations in manufacturing paired with “purpose-built vehicles and factories” were a viable solution to the EV production expense problem. As you can see based on the chart below, it seems to be working.

The Average Cost To Produce A Tesla Is Just $36,000
© Provided by Inside EVs external_image

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Tesla also shared that its cost (COGS) per vehicle dropped to around $36,000 in Q3 2021, as well as Q4. COGS stands for “cost of goods sold,” and includes all costs and expenses directly related to the production of a product. It excludes things like overhead and sales and marketing, though Tesla doesn’t advertise like traditional OEMs, so we know it’s saving money on that front as well. The electric automaker adds:

“We believe our current projects, including large castings, structural battery pack, 4680 cells and many others, should help us continue to minimize our product cost.”

Considering the starting prices of Tesla’s current lineup in the US, the $36,000 figure is quite impressive. While the entry-level Model 3, Tesla’s least expensive vehicle, starts at $44,990, prices rise pretty quickly after that. In fact, no other new Tesla vehicle sold today has a starting price under $50,000. The Model Y starts at around $60,000, and the refreshed Model S and X start at $95,000 and $105,000, respectively.

That said, we do know that most of Tesla’s sales are Model 3 and Model Y vehicles, and that Model Y sales saw massive growth last year, especially in the US.

Check Out More Related Tesla Coverage:

  • Tesla Q4 2021 Final EV Delivery Numbers And Outlook
  • Tesla Reveals How Quickly It Increased Its Market Share

What are your thoughts? Start a conversation about this topic in the comment section below. How long will it take OEMs to reach a level playing field with Tesla related to vehicle cost and operating margins?

Source: Tesla

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