Photo: gamerfreak4life via Reddit
We like to drive them, we like to talk about them, we like to look at them, and we like to listen to them, but for the people who make them, ultimately it's all about making a profit.
A car is the second most important purchase a person makes in their life, and just by looking at where some people live and what cars they buy, you might even postulate that it's the most important one for some. They go well beyond their simple task of acting as means of transportation and instead become an extension of our personalities.
That's how you can explain the kind of money some individuals are willing to pay on their vehicles, and it's something all brands are trying to exploit by building their perceived image which in turn reflects on their products.
Tesla is by no means a stranger to this tactic, and the fact it did it all without using virtually any paid advertising is all the more impressive. It has allowed Elon Musk to have a gross margin of approximately 25 percent on Tesla's Model S flagship sedan, which is one of the highest in the industry.
But doing it on premium vehicles that cost upward of $70,000 is one thing, maintaining it on a model that's supposed to sell 400,000 units annually is completely different. It would be a first for the automotive industry and would put Tesla in a very favorable spot, eligible for over $4 billion in gross margin from just a single product line.
And, based on past performance, Evercore ISI analyst George Galliers thinks that Tesla can do it (via Electrek): "To put Tesla’s growth in context, we note it took Porsche 10 years and four product lines to grow from [about 35,000 units to just under 100,000 with four different product lines, compared with Tesla’s three]. Even with only a small contribution from the more affordable Model 3, Tesla is on course to achieve similar growth in only 3 years.”
Of course, one analyst saying Tesla will pull it off doesn't mean it will actually happen, but looking at the company's journey so far, you have to give it credit.
That's how you can explain the kind of money some individuals are willing to pay on their vehicles, and it's something all brands are trying to exploit by building their perceived image which in turn reflects on their products.
Tesla is by no means a stranger to this tactic, and the fact it did it all without using virtually any paid advertising is all the more impressive. It has allowed Elon Musk to have a gross margin of approximately 25 percent on Tesla's Model S flagship sedan, which is one of the highest in the industry.
But doing it on premium vehicles that cost upward of $70,000 is one thing, maintaining it on a model that's supposed to sell 400,000 units annually is completely different. It would be a first for the automotive industry and would put Tesla in a very favorable spot, eligible for over $4 billion in gross margin from just a single product line.
And, based on past performance, Evercore ISI analyst George Galliers thinks that Tesla can do it (via Electrek): "To put Tesla’s growth in context, we note it took Porsche 10 years and four product lines to grow from [about 35,000 units to just under 100,000 with four different product lines, compared with Tesla’s three]. Even with only a small contribution from the more affordable Model 3, Tesla is on course to achieve similar growth in only 3 years.”
Of course, one analyst saying Tesla will pull it off doesn't mean it will actually happen, but looking at the company's journey so far, you have to give it credit.
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