Monitoring desk
ISLAMABAD/DETROIT: American multinational automotive firm Tesla Inc earns more money for every car it sells than its international rivals. Chief Executive Elon Musk is using superior profitability as a weapon in an electric vehicle (EV) price war he started.
One of the auto industry’s largest money losers, Tesla has built the commanding lead over most significant rivals in profit per vehicle over the past year, a Reuters analysis of industry data shows.
Tesla earned 15,653 dollars in gross profit per vehicle in the third quarter of 2022 and more than twice Volkswagen AG, four times the comparable data at Toyota Motor Corp, and five times more than Ford Motor Co.
Tesla increasing prices of vehicle
Most of this year, Tesla has joined rivals in aggressively increasing prices on its most famous vehicle, the Model Y SUV. Shortages of semiconductors and other goods kept auto factory production down, allowing companies across the factory to focus on higher-margin models and book substantial profits, even as sales volumes fell.
Tesla’s decision to reverse a course and spend its production-cost advantage on price cuts now issues the profit-over-volume strategies established automakers such as GM have pursued in the 2008 economic crisis and doubled down on during the pandemic.
To control production costs, Tesla invested heavily in fresh manufacturing technology to use large castings to replace small metal parts. Tesla brought battery manufacturing and the other parts of its supply chain in-house and standardized car designs to improve economies of scale.
