Although that is the standard method for calculating profits per vehicle, Tesla includes carbon credits in its calculations. That money comes from automakers that have to lower their carbon emissions not to be fined. As Tesla sells (theoretically) carbon-emission-free vehicles, it gets credits it can sell to automakers that sell cars with combustion engines. Summing up, it was money that indeed came from vehicles, but not the ones Tesla sells.
In Q3 2022, Tesla received $286 million for these credits. In other words, its profits from car sales were actually $3 billion, not $3.29 billion. But that is just part of the reason why the Nikkei Asia numbers are debatable.
Tesla short sellers constantly accuse the EV maker of using “creative accounting” to present numbers that look better than they actually are. They say the company would have classified millions of warranty repairs as goodwill to avoid including them as operating expenses, which could bring Tesla’s results down. Another point they bring up is that these operating expenses are weirdly constant despite Elon Musk calling Giga Grünheide and Giga Austin “money furnaces.” If they really burn money, that does not show in Tesla’s earnings reports.
In Q3 2021 – before these factories started operations – Tesla said its operating expenses were $1.656 billion. In Q3 2022, with the plants already producing cars and still going through construction work, the operating expenses were $1.694 billion, or only $38 million more for two new factories. Short sellers have a strong point here. Despite that, they concede that only the Tesla CFO, Zach Kirkhorn, and PricewaterhouseCoopers (Tesla’s audit company) could clarify the magic numbers.
Let’s work with the possibility that they are accurate and that carbon credits should really be counted as profits per car. In that case, Nikkei Asia calculated that Tesla makes $9,570 on average for every EV it sells. Sounds great, right? But did anybody ask Tesla shareholders why they have never received dividends for such extraordinary profits? Especially in a company that proudly claims not to spend money on marketing or PR? Toyota has all these expenses and regularly pays dividends.
This is not even the most relevant question to ask. Think about Tesla customers. The cheapest EV from the company in the U.S. is the Tesla Model 3 Rear-Wheel Drive, which costs $46,990. What if they could pay $9,570 less for this car? It would cost them $37,420, or less than a Hyundai Ioniq 5, which starts at $41,450 in California. If Tesla sold it for the same price as Hyundai sells its EV, it would still make $4,030 in profits per car, way more than the $1,171.75 that Toyota makes selling 2.62 million vehicles in a quarter – more than Tesla sells in a whole year.
For a company that brags so much about the mission of putting an electric car in everybody’s hands and selling 20 million of them by 2030, earning almost $10,000 per EV sounds pretty greedy. The people feeding this gluttony will probably feel like fools for paying so much more for their cars – 25% more in the example we used above. Ok, some won’t: especially those who give Tesla $15,000 more for software (Full Self-Driving) they will most likely never use.
In the end, we have two possibilities when faced with the numbers Nikkei Asia calculated for the American EV maker. Either they are correct, and Tesla is indeed the automotive version of Ebenezer Scrooge, or they are inflated to make Tesla sound like a solid investment, and nobody really knows how much money it makes for each car it sells. None of them paints the company in a good light. Pick one.