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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News
Tesla’s AI Chief just hinted at something big for FSD v14 lite owners
Tesla’s AI chief suggests the newest FSD v14 Lite build may finally go wide release.
Tesla’s head of AI, Ashok Elluswamy, noted on Sunday that the newest FSD v14 Lite build rolling out to Hardware 3 cars is likely the version that goes to wide release, the strongest signal yet that Tesla is near to closing out an early access phase that Hardware 3 owners have waited more than a year for.
Elluswamy made the comment in response to an extensive review from Tesla owner Zack, known on X as @BLKMDL3, who tested software version 2026.20.6.10 and detailed the changes in a lengthy post. “FSD v14 Lite (for Tesla AI3 hardware vehicles) review.
The update restarts a rollout that had stalled after its initial release. Tesla began pushing FSD v14 Lite to Hardware 3 early access drivers on June 29, bringing driving behavior learned on the newer Hardware 4 computer down to the more limited chip that has powered Tesla vehicles built between 2019 and early 2023. That release, as we covered in detail, gave roughly 4 million HW3 vehicles their first meaningful update since being frozen on version 12.6 in early 2025.
Tesla Full Self-Driving v14 ‘Lite’ Release Notes: new capabilities and features
The latest build adds features that bring Hardware 3 closer in line with what Hardware 4 owners already have. FSD can now start directly from park without a brake pedal confirmation, a change Zack called a small but meaningful quality of life improvement. The interface also picks up the blue “P” park icon, approaching destination alerts, and a dedicated Self-Driving app with streak tracking, all details previously exclusive to the AI4 branch of v14, as outlined in Tesla’s original release notes.
The stakes around Hardware 3 go beyond software polish. Tesla sold the Full Self-Driving package for years on the promise that every vehicle equipped with it had the hardware needed to eventually drive itself without supervision. That promise broke down during Tesla’s Q1 2026 earnings call, when Musk acknowledged HW3 cars could not run unsupervised FSD, prompting Tesla to offer trade-in discounts and hardware retrofits alongside the Lite software track.
Tesla confirmed HW3 can’t do Unsupervised FSD but there’s more to the story
Tesla has continued to frame v14 Lite as the primary path forward for the HW3 fleet, telling owners in April that international markets would follow the U.S. rollout once regulatory approvals came through. For now, HW3 owners in the early access group are the only ones running the new build. A broader rollout would mark the second major software delivery to the legacy fleet since Tesla first released FSD v14 to Hardware 4 vehicles, and the first sign since June that the Lite program is still moving rather than stuck in early access limbo.
In a pointed message on X, Elon Musk warned that firms maintaining significant short positions in SpaceX over time face “very low” survival probability.
The statement comes amid post-IPO volatility for the rocket company, now trading under the ticker $SPCX.
The survival probability of firms who maintain a significant short position in SpaceX over time is very low
— Elon Musk (@elonmusk) July 17, 2026
Five weeks after what was described as the largest IPO in history, the stock had fallen roughly 30% from its peak above $2.6 trillion, briefly surpassing Microsoft and Amazon in market value. Short sellers celebrated gains of about $8.7 billion, but Musk’s reply underscores his long-term conviction.
The warning directly echoes a detailed bullish analysis arguing that Starship’s cost reductions could unlock a multi-trillion-dollar space economy. Projects ranging from solar power beamed from orbit and asteroid mining to orbital data centers and Mars terraforming were projected to create over $100 trillion in new market capitalization.
In this vision, SpaceX acts as the essential infrastructure provider, akin to AWS for cloud computing, capturing monopoly-like revenues from launches, crew transport, and data traffic across a rapidly expanding frontier.
This is far from the first time Musk has targeted short sellers. With Tesla, he has repeatedly framed persistent bears as destined for major losses. In July 2024, Musk declared that once Tesla achieves full autonomy and volume production of Optimus robots, “anyone still holding a short position will be obliterated. Even Gates,” referencing Microsoft co-founder Bill Gates’ reported short bets.
Elon Musk reveals what Tesla stock surge could do to Bill Gates
Earlier, in 2018, he taunted shorts that they had “about three weeks before their short position explodes,” a remark followed by sharp stock gains. Musk has also called short selling “value destroying” and once suggested it “should be illegal,” viewing it as betting against innovation and progress.
Critics often dismiss Musk’s optimism as hype, especially when near-term metrics like quarterly deliveries or stock fluctuations disappoint.
Yet his pattern remains consistent: framing short positions against his companies as fundamentally misjudging exponential technological leaps. For SpaceX shorts, the message is clear: betting against multi-planetary ambitions and the infrastructure monopoly they enable carries existential risk for the firms involved.
As Musk and supporters see it, the space economy’s upside dwarfs Earth-bound valuation models, making today’s dips temporary in a decades-long ascent.
Tesla has evidently revealed which of its vehicle models will be the first to receive Starlink integration: the Cybercab.
Tesla’s Santana Row showroom now has a full-fledged display of the Cybercab, with an extensive bit of information hung around an exhibit that seems to reveal the vehicle’s newest feature: an integrated Starlink antenna that will enable secure and reliable internet access during trips.
Credit: @Starscream_SJC | X
Cybercab is geared toward autonomous ride-hailing for one or two passengers. The production units rolling off the lines at Gigafactory Texas are built without steering wheels or pedals, meaning when public rides begin, passengers will not need to interact with a human being or control the vehicle in any way outside of what appears on the center screen for their entertainment during the ride.
Tesla Santana Row will be reopening tomorrow with a full focus on self-driving. Everything in the showroom is about Robotaxi and Cybercab with stats and information about the technology. The Cybercab on display is the production model. pic.twitter.com/yIUYdOGFOp
— Shaun Cassidy (@Starscream_SJC) July 20, 2026
Along the display, Tesla wrote this message about Cybercab:
“Cybercab is built for autonomy. It has no steering wheel, no side mirrors, and no pedals. It goes where you tell it to go and how you want it to, so you can relax along the way. It is hyper aware and responsive to your surroundings, monitoring other drivers, responding to emergency vehicles, utilizing its expertise in the rarest scenarios to help keep you safe.”
Tesla has been teasing a potential Starlink integration for quite some time now. In December, the company hinted at potential Starlink internet terminal integration within its vehicles in a patent that described a vehicle roof assembly with integrated radio frequency (RF) transparency.
The company wrote in its patent application that a new roof design built with materials that differ from the standard metallic or glass elements used in today’s cars would allow it to integrate modern vehicular technologies, in particular, ones that require radio frequency transmission and reception.
Tesla suggested high-strength polymer blends, like Polycarbonate, Acrylonitrile Butadiene Styrene, or Acrylonitrile Styrene Acrylate.
This is the first time we’ve seen Tesla officially confirm the Starlink integration into the Cybercab. It’s not much of a surprise considering the company’s intention behind the Cybercab, which is to make travel autonomous.
Productivity will now be at a maximum during a work-related commute, while the center screen could be utilized for Netflix or potentially even live TV for those who are heading to dinner or to a fun activity.
Tesla’s AI Chief just hinted at something big for FSD v14 lite owners
Elon Musk sends first warning to SpaceX short sellers
