Earlier this week, a report was released that revealed Tesla’s margins for the Model Y crossover in Shanghai. Guosen Securities, a Shenzen-based financial firm, found that Tesla holds a nearly 30% marginal rate on every unit. As the Model Y just recently began production and has become available for Chinese citizens to order, Tesla is already winning in 2021 as demand for the all-electric crossover is expected to be higher than the already-popular Model 3.
Peeking at the margins, it was reminiscent of the astronomical margins Tesla held early on with the Model 3 in Shanghai: 39.37%.
Breaking down the math for you all, an article I wrote earlier this week on the topic describes the price for manufacturing the vehicle and then compares it to the Made-in-Shanghai Model Y price for consumers.
“According to the Shenzhen, China-based financial firm, Tesla’s China Model Y only costs ¥237,930 (USD 36,852) to produce. However, its selling point gives Tesla a 29.4% gross margin with a price of ¥339,900 (USD 52,646.25). Due to the current demand for the all-electric crossover that just started being produced at Giga Shanghai, Tesla has plenty of room to come down. The company will likely do this after the demand is sustained for several months because the automaker did the same thing with the Model 3 after its initial gross margin was also turning Tesla a tasty profit.”
As a $TSLA investor, the margins made me feel great. Tesla is turning a sizeable profit on Model Y builds early on, and the margins are significantly higher than the automotive industry average, which sets around 8-10%. Holding 30% margins on any product, let alone a $52,000 car, is everything investors want. It means the company is pricing their vehicles to be competitive in a market where EVs are thriving, but it also means that Tesla is able to sell their car at a higher price while still being able to keep demand sustained.
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But it got me to thinking, does this mean that Tesla could technically drop the price of the Model Y in the future? The company would have the ability to still turn a profit and have a great margin that is higher than the auto industry average, but it would also create even more buzz for the car because it would be priced even lower than it already is. It is no secret that Tesla leads the industry in many ways, and a cheaper price tag for a Tesla EV would likely do a number of things that could be looked at positively: 1) Make a car more affordable, inching closer to price parity, and 2) Increase the number of vehicles on the road that dawn the Tesla T.
From an investor’s standpoint, it is tough to see an argument where lower margins are a good thing. We want competitive pricing, but why would we want it to be lower if the sales are there? Demand is healthy, there is no questioning that. Tesla showrooms in China were filled over the weekend with people looking to get a glimpse of the Model Y. Rumors have indicated that Tesla has already sold out of the car, showing that the vehicle was highly-anticipated and regardless of the price, people would buy.
Tesla showrooms get volunteer help amid Made-in-China Model Y launch
So what’s the big deal? Why would anyone want to decrease the cost of the cars?
From a consumer standpoint, lower prices are always better. Of course, wherever we can stand to save a few hundred, or even a couple thousand dollars on a car, we are going to do it. Of course, Tesla did away with price negotiations for cars (which is by far the most stressful part of buying a vehicle), so it’s not like owners can save money by wiggling down salespeople.
But looking at it from this point of view, Tesla has room to come down, and they’ve done it before. The Model 3, at the time of its release in China last year, was giving Tesla a massive 39.37% margin, and the price of the car was decreased five times in 2020. Based on estimations, Tesla could have margins around 25% on the Model 3 now, a nearly 15% decrease compared to the earliest projections.
There was wiggle room: Tesla did it once to reach the price point for government incentives, and others because production costs had gone down due to vertical integration. Grace Tao says there are probably no more price reductions in the future on the Model 3, but who knows what could happen.
The Model Y is a highly appealing vehicle due to its body style. Crossovers are some of the most popular cars on the market, and Tesla knows that. Elon Musk once said that the Y would overcome the 3 and be Tesla’s biggest seller. After the company released the Standard Range RWD variant on Thursday night, it is a good possibility to happen this year.
I think it is safe to assume that the Model Y will be a popular car in China just like the Model 3 has been. I think it is safe to assume that Tesla will really only battle with GM’s Wuling HongGuang Mini EV in that market this year. I also think it is safe to assume that Tesla isn’t going to adjust the price of the Model Y soon, considering the car just came out.
Moving forward, I think that consumers can assume that the Model Y will drop in price. Tesla will confirm that demand is healthy, and the company will continue to integrate parts of the car locally to save costs. This will bring the cost of the vehicle down anyway, so the price to the consumer will likely be adjusted accordingly.
There are advantages to keeping the margins high, especially with Tesla, because it is such a young company. Profitability will only increase, and Tesla will likely extend its consecutive quarter streak because of it. Tesla will make more money, sales will likely remain as demand is healthy, and shareholders will keep their smiles because the stock price will go up.
There are also advantages to cutting the cost: Tesla will move closer to parity with gas cars by adjusting the price, it will still have considerably higher margins than the auto industry average, and it will still make Tesla money, even if it is less.
I would love to hear your thoughts on the matter. I spoke to other investors, and they saw both sides as well, but of course, they felt the higher margins were more advantageous as their money is funneled into the company. I also feel that the high margins benefit me personally, but I would also like to see price decreases in the future to make the EVs more affordable.
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In a new interview on Wednesday, Tesla uber bull Ron Baron said that anyone looking to buy the company’s stock should do so as soon as they can.
Baron, founder and CEO of Baron Capital and one of Tesla’s most persistent institutional bulls, used a CNBC Squawk Box appearance on Wednesday to deliver a familiar message with fresh urgency: In his opinion, Tesla stock is a buy:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.”
The Baron Capital frontman’s case is built around Full Self-Driving. Tesla reported 1.48 million active FSD subscriptions in the second quarter, up 56 percent year over year, and company officials have said roughly 55 percent of new North American deliveries left with a subscription enabled.
Baron framed that attach rate as proof the product is moving from enthusiast extra to default expectation, and as a reason software, not just vehicle volume, should drive the next phase of value.
His conviction on Tesla shares is not theoretical, as Baron Capital made its first Tesla investment in 2014, after years of meetings that began around the 2010 IPO roadshow. The firm later built a large SpaceX position starting in 2017.
Ron Baron today in new interview on Tesla:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.” pic.twitter.com/Rv5PB0bVZ2
— Sawyer Merritt (@SawyerMerritt) September 16, 2026
Baron said those Musk-led bets have generated about $30 billion of the $71 billion in profits Baron Capital has produced for clients. He put the firm’s current exposure at roughly $25 billion in SpaceX and $5 billion in Tesla. Personally, he described SpaceX as his largest holding, at about $5 billion, with about $1.5 billion in Tesla and additional Tesla exposure through the firm’s funds.
That concentration is also a statement of loyalty. Asked about talk of a SpaceX-Tesla combination, Baron said he had already walked Elon Musk through arguments for and against a deal, then declined to repeat them on air. His public position was simpler: “Whatever you decide is better is what I’m going to support,” he said to Musk.
Baron also said that he picked up the farewell edition of the Model S after Tesla decided to sunset the vehicle earlier this year, calling it his favorite car he’s ever driven.
Elon Musk
SpaceX’s next Starship launch is about to attempt its biggest leap yet
SpaceX targets September 22 for Starship Flight 14, its first attempt to reach real orbit.
SpaceX has set September 22 as the target date for Starship’s 14th test flight, and this one carries a different goal than any of the 13 that came before it. Every previous Starship mission has intentionally flown a suborbital arc, reentering the atmosphere within the same hour it launched. Flight 14 is designed to send the craft into a genuine orbit around Earth for the first time.
The launch window opens at 7:15 a.m. Central time at Starbase in South Texas and runs for 75 minutes, pending regulatory approval, according to SpaceX’s mission description published Tuesday. If the flight goes as planned, Starship will circle the planet roughly six times at an altitude near 275 kilometers over about ten hours before a deorbit burn sends it toward a splashdown in the Pacific Ocean west of Chile, a departure from the Indian Ocean recoveries used on the last several flights.
The mission also marks the first attempt to put a working batch of Starlink V3 satellites into actual service. Flight 13 carried 20 of the new satellites in July, but because that mission never left a suborbital trajectory, the payload reentered along with the ship instead of separating into orbit.
SpaceX tells the FCC that Starship Flight 14 is going to orbit
Each V3 satellite is rated for roughly one terabit per second of downlink capacity, so a successful deployment on Flight 14 would be SpaceX’s largest single jump in network bandwidth since Starlink began flying on Falcon 9.
Flight 13 still did the heavier lifting on the technical side. That July mission flew a deliberately more stressful reentry profile to test Starship’s heat shield, and the ship survived its softest splashdown yet, intact enough for drone inspections shortly after landing. Elon Musk said the flight delivered “all the heat shield data we needed and then some,” a result Teslarati covered in detail when he later said SpaceX had solved the vehicle’s biggest reusability challenge. Flight 14 is where SpaceX starts spending that confidence on an actual orbital insertion rather than another controlled fall back to Earth.
One thing Flight 14 will not attempt is a tower catch of the ship. Musk floated the idea right after Flight 13, but walked the timeline back in August, saying a catch attempt was more likely “in a few months.” The Super Heavy booster will still aim for its own recovery, targeting an offshore landing point in the Gulf of America, the same approach used on recent flights.
September 22 is SpaceX’s own target, not a locked date. Starship’s schedule has slipped before over hardware readiness and FAA sign off, and the company has said as much in its own mission notes. But the plan itself represents the clearest marker yet that Starship is moving from a suborbital test program into something meant to carry paying payloads and, eventually, people.
Elon Musk
Elon Musk gives his most telling Tesla-SpaceX merger conversation yet
Elon Musk hinted a Tesla-SpaceX merger could be coming, and Wall Street is taking notice.
Elon Musk gave his clearest signal yet that Tesla and SpaceX could eventually combine, telling the All-In Summit in Los Angeles that the two companies’ deepening collaboration makes the question worth asking. Sawyer Merritt first surfaced the highlight on X Tuesday.
Asked directly why Tesla and SpaceX remain separate given how closely they already work together, Musk told hosts at the summit: “Great question there. With all this collaboration, on so many levels, who can imagine what action one might take when there’s so much close collaboration in so many areas.” SpaceX President Gwynne Shotwell, who joined Musk on stage, added that SpaceX personnel have already moved into xAI to fill leadership and engineering gaps, saying the businesses are integrating “faster than I thought,” though “not fully integrated yet,”
The comments landed on top of merger speculation that has been building on Wall Street for months. JPMorgan has called a tie-up “strategically coherent on paper,” pointing to overlapping ambitions in AI, robotics, energy, transportation and space. Jefferies went further, estimating Musk could retain roughly 55.3 percent voting control in a deal structured without a premium, a scenario that would still leave room for Tesla shareholders to come out ahead. On Kalshi, traders now put the odds of a merger before 2028 at 66 percent.
Tesla’s stake in SpaceX, still under one percent, traces back to its earlier investment in xAI, which converted to SpaceX equity after SpaceX absorbed the AI company. The two are also jointly building Terafab, a chip facility in Austin meant to serve both Tesla’s AI computing needs and SpaceX’s satellite ambitions. Wedbush analyst Dan Ives has stood by a 2027 merger timeline for months, and Cathie Wood’s ARK Invest recently floated a similar case, an idea Musk pushed back on directly at the time.
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
The timing adds another layer. Tesla has scheduled an October 1 unveiling for its next generation Roadster at a venue near SpaceX’s McGregor, Texas test site, using the phrase “Go for launch” in its promotional material. Both stocks dipped roughly 2 percent Monday before recovering slightly in premarket trading Tuesday, with SpaceX shares up about 0.4 percent and Tesla essentially flat.
Musk stopped short of confirming anything is in motion. But unlike his past denials of a corporate restructuring, this response didn’t rule one out, and it came with Shotwell sitting next to him describing an integration that’s already underway.
Tesla uber bull Ron Baron says ‘the time to buy the stock is now’
SpaceX’s next Starship launch is about to attempt its biggest leap yet
