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Tesla’s Margins: Is there wiggle room for even more affordability?

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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.”

Tesla’s China Model Y has 29.4% gross margin: report

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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

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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.

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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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I use this newsletter to share my thoughts on what is going on in the Tesla world. If you want to talk to me directly, you can email me or reach me on Twitter. I don’t bite, be sure to reach out!

Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Hydrogen Cars Were Supposed to Be the Future. Now Owners Are Suing Toyota

Several Mirai drivers have found themselves still paying for cars they don’t even drive anymore.

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Credit: Toyota USA/X

The promise of a hydrogen-fueled future has turned into a nightmare for hundreds of car owners in California. Drivers who purchased Toyota’s flagship fuel cell vehicle, the Mirai, are now suing the automaker and other key players, alleging they were misled about the viability of the hydrogen fueling network. With infrastructure collapsing and hydrogen prices surging, several Mirai drivers have found themselves still paying for cars they don’t even drive anymore.

The legal backlash comes as Toyota and other early champions of hydrogen-powered mobility face growing criticism over whether they pushed a technology too soon into an unprepared market.

A green gamble gone wrong

Sam D’Anna had barely driven his $75,000 Toyota Mirai in July 2022 when he realized something was wrong. His Mirai’s hydrogen tank was nearly empty. A dealership staffer at Roseville Toyota ran over to inform him that the nearest fueling station, in Citrus Heights, was offline. The next closest one was in West Sacramento, nearly 25 miles away. That should not be a problem for the Mirai due to its 402-mile EPA-estimated range, but since the car was almost empty, his range indicator showed only 22 miles.

Credit: Toyota USA/X

“I’ve already signed,” D’Anna told the Sacramento Bee. He ended up droving off the lot with the air conditioning turned off to conserve fuel. “This is bad. My heart was dropping into my stomach.”

D’Anna is now one of the plaintiffs in a class action lawsuit against Toyota, hydrogen station operator FirstElement Fuel, the Hydrogen Fuel Cell Partnership, and California Governor Gavin Newsom. 

The complaint, filed in Los Angeles Superior Court, accuses the defendants of fraud, negligence, and violations of consumer protection laws, among others. It alleges that Toyota knowingly sold vehicles reliant on a fueling ecosystem that was more than subpar, trapping buyers in loans for cars they can barely use.

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D’Anna’s Mirai now sits unused under a tarp at his father’s house in El Dorado County. He still pays nearly $1,100 a month on the car, on top of a $1,200 monthly payment for a Ford F-150 hybrid he purchased in 2023 as a replacement.

Credit: Toyota USA/X

Infrastructure that never materialized

At its peak, California’s hydrogen vision appeared ambitious but achievable. The state pledged tens of millions of dollars to build a network of fueling stations. Automakers like Toyota, Hyundai, and Honda introduced sleek zero-emission vehicles powered by compressed hydrogen gas.

The pitch was compelling. Drivers could refuel in a few minutes and emit only water vapor, a seemingly reasonable if not preferable alternative to electric vehicles, which were still gaining traction.

But the real-world rollout failed to keep pace with the marketing. California currently has about 50 hydrogen fueling stations, as per data from the Hydrogen Fuel Cell Partnership. And in 2024, Shell exited the market and shuttered multiple locations.

Even when hydrogen stations are available, they are often plagued by maintenance issues and inconsistent supply. Hydrogen prices have tripled too, and what once cost $70 to fill now runs closer to $200, the Bee noted.

Credit: Toyota USA/X

In a statement to Teslarati, Patrick Peterson, auto expert at GoodCar.com, said, “Toyota and Hyundai were among the first to push hydrogen forward, and their vehicles are genuinely impressive. But the issue isn’t the tech, it’s everything around it. The infrastructure just isn’t ready. Most drivers aren’t willing to gamble on whether they’ll find a working hydrogen station or deal with issues like frozen fuel nozzles.”

Peterson said hydrogen’s biggest flaw is its lack of consistency. “EVs, for all their early bumps, have earned consumer trust. You’ve got widespread charging access, predictable performance, and fewer question marks. Hydrogen hasn’t hit that point yet. One bad fill-up can sour someone’s view of the entire platform.”

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The price of faith in an idea

Ricky Yap of West Sacramento bought his 2016 Toyota Mirai in 2020 from Roseville Toyota. The vehicle, priced at $16,000, came with a prepaid fuel card worth the same amount. Initially, the fueling experience was “a bit cumbersome and confusing but not so bad,” Yap told the Bee. Then things got a lot worse.

Credit: Toyota USA/X

Shell’s closure of hydrogen stations led to long lines at the only remaining site in Sacramento. Hydrogen prices soared, and fueling, thanks to long lines at the station, ended up taking as long as four hours. Yap eventually stopped using the car altogether. He canceled the insurance and registered it as a non-operational vehicle.

“I used it very seldom just because of the fact I don’t like the stress,” he said. “I don’t want to pay insurance on a car that I can’t use every day.”

The lawsuit claims that Toyota and its partners misled consumers about the viability of the hydrogen ecosystem. Many owners were driven by environmental motivations, enticed by generous incentives and Toyota’s reputation. But the resale value of hydrogen cars has collapsed.

One plaintiff, Parita Shah, a physician assistant from Sacramento County, told the Bee that her dealership offered her only $2,000 for her $36,000 Mirai after stations near her home shut down just months after purchase.

Credit: Toyota USA/X

Consumers’ legal action turns up the pressure

In July 2025, frustrated Mirai owners organized a demonstration in Los Angeles to draw attention to what they called a broken promise. Protesters held signs reading “Mirai is a Lie,” “Toyota Made a Big Mistake,” and “Mirai Left Me Dry.”

Jason Ingber, attorney for D’Anna, Yap, and several other Mirai owners, spoke at the event. He accused the automaker of knowingly selling a product into a failing infrastructure.

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“These are brands they thought they could rely on, and they go in, and they’re told ‘This is the next best thing!’ and it turns out, it’s not,” Ingber told KTLA 5

Ingber also shared a comment to Teslarati: “Toyota is still selling this car. It makes no damn sense. No fuel for drivers. The car doesn’t work as advertised,” he said.

Credit: Jason Ingber

Automakers offer limited relief

Toyota has acknowledged the fueling issues and confirmed that it stopped selling new Mirais in the Sacramento area over a year ago. In a statement to the Bee, the company said it is “working with affected Mirai customers to identify ways to help them on a case-by-case basis.”

Rental cars and service credits are among the remedies offered, but plaintiffs argued that these are not sustainable solutions. Shah stated that the rental process is quite cumbersome. In her case, she has been relying on a series of short-term rental cars provided by Toyota, which she must exchange every 25 days. She continues to make $326 monthly payments on he Mirai, which she cannot use.

Hyundai, whose Nexo SUV also relies on hydrogen fuel, has offered similar 21-day rental options. The company also issued a recall for about 1,600 Nexo SUVs in late 2024 due to possible hydrogen leaks and potential fires, warning owners to park their cars outside until repairs were made.

A shrinking market

Since 2012, just under 18,000 hydrogen-powered vehicles have been sold in California. Toyota accounts for the vast majority of them, but the pace of adoption has slowed dramatically. For comparison, California now has millions of battery electric and hybrid vehicles on the road.

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Credit: Toyota USA/X

Policies have also seen a notable shift. California initially committed about $20 million annually to develop hydrogen fueling infrastructure. That number has since dropped to $15 million, and it’s no longer limited to light-duty stations. 

Josh Newman, a former state senator and current Mirai owner, told the Bee that government support has fallen short. “I blame the state. We were supposed to have 200 stations up and running for light-duty hydrogen vehicles by 2025,” he said.

In a statement to Teslarati, Alex Black, Chief Marketing Officer at EpicVIN, said the problem now extends beyond infrastructure. “Yes, hydrogen cars do have an image problem right now,” he said.

“Many just do not have confidence in the technology, largely because they have not seen very many out there, there are not many places to fill them up, and have heard about previous recall problems or problems. That tends to stick with them.”

Black added that public sentiment plays a powerful role. “When public sentiment turns, all activity comes to an end: reduced demand, reduced investment, and fewer stations are built. It’s a vicious circle.”

Credit: Toyota USA/X

A clean tech cautionary tale

Toyota’s investment in hydrogen was bold and well-intentioned. The technology offers apparent advantages, especially for long-haul or commercial use cases where quick refueling and long range are critical. But for personal mobility, hydrogen’s future remains uncertain, if not questionable, today.

The technology may still find its place in transportation. But for now, at least, consumer trust in hydrogen vehicles has been undermined, and infrastructure is still unreliable for those who have opted to become early adopters of the technology. For those who bought into the vision early, the experience has turned into a cautionary tale.

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“People want something they can rely upon,” said Black in his statement to Teslarati. “And they want it to be easy. Hydrogen is not quite there yet.”

For Mirai owners still making monthly payments on cars they cannot drive, the idea of a hydrogen powered future is very sobering.

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SpaceX to invest $2 billion in Elon Musk’s xAI: report

The $2 billion injection is reportedly part of a broader $5 billion equity raise for xAI announced by Morgan Stanley last month.

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Credit: xAI/X

SpaceX is investing $2 billion into Elon Musk’s artificial intelligence startup, xAI, marking one of the private space company’s largest-ever financial commitments to another firm. 

News of the investment was initially posted by The Wall Street Journal.

xAI integration

The $2 billion investment is reportedly part of a broader $5 billion equity raise for xAI announced by Morgan Stanley last month. As per investors reportedly familiar with the matter, this is SpaceX’s first known investment in xAI. The AI startup was recently merged with X, Musk’s social media platform, in a deal that valued the combined entity at $113 billion.

Musk has mobilized several of his companies to support xAI’s growth. In addition to Grok being embedded in X, it now powers support functions for SpaceX’s Starlink satellite internet service, the WSJ noted. Tesla has also started integrating Grok on its new vehicles. Musk has stated that Grok will be used with Tesla’s humanoid robot, Optimus, as well. 

SpaceX investments

The investment highlights Musk’s ambitions to position xAI as a major competitor to rivals such as OpenAI. Grok 4, launched earlier this week, received strong benchmarking scores, with Musk calling it the “world’s smartest artificial intelligence.” So far, xAI’s performance boost with Grok 4 has earned praise from AI-benchmarking firms, such as Artificial Analysis.

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SpaceX, which had more than $3 billion in cash as per a previous WSJ report, is typically very conservative with external investments. One of its few past acquisitions was a $524 million deal for Swarm Technologies, a satellite-communications firm, in 2021. Musk has also tapped into SpaceX resources to support his other ventures, including Tesla and The Boring Company. 

In a recent comment on X, Elon Musk acknowledged that it would be great if Tesla could invest in xAI as well, though doing so would be subject to Board and shareholder approval.

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SpaceX’s Crew-11 mission targets July 31 launch amid tight ISS schedule

The flight will lift off from Launch Complex 39A at Kennedy Space Center in Florida.

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spacex-dragon-axiom-ax-4-mission-iss
(Credit: SpaceX)

NASA and SpaceX are targeting July 31 for the launch of Crew-11, the next crewed mission to the International Space Station (ISS). The flight will lift off from Launch Complex 39A at Kennedy Space Center in Florida, using the Crew Dragon Endeavour and a Falcon 9 booster.

Crew Dragon Endeavour returns

Crew-11 will be the sixth flight for Endeavour, making it SpaceX’s most experienced crew vehicle to date. According to SpaceX’s director of Dragon mission management, Sarah Walker, Endeavour has already carried 18 astronauts representing eight countries since its first mission with NASA’s Bob Behnken and Doug Hurley in 2020, as noted in an MSN report.

“This Dragon spacecraft has successfully flown 18 crew members representing eight countries to space already, starting with (NASA astronauts) Bob (Behnken) and Doug (Hurley) in 2020, when it returned human spaceflight capabilities to the United States for the first time since the shuttle retired in July of 2011,” Walker said.

For this mission, Endeavour will debut SpaceX’s upgraded drogue 3.1 parachutes, designed to further enhance reentry safety. The parachutes are part of SpaceX’s ongoing improvements to its human-rated spacecraft, and Crew-11 will serve as their first operational test.

The Falcon 9 booster supporting this launch is core B1094, which has launched in two previous Starlink missions, as well as the private Ax-4 mission on June 25, as noted in a Space.com report.

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The four-members of Crew-11 are NASA astronauts Zena Cardman and Mike Fincke, as well as Japan’s Kimiya Yui and Russia’s Oleg Platonov.

Tight launch timing

Crew-11 is slated to arrive at the ISS just as NASA coordinates a sequence of missions, including the departure of Crew-10 and the arrival of SpaceX’s CRS-33 mission. NASA’s Bill Spetch emphasized the need for careful planning amid limited launch resources, noting the importance of maintaining station altitude and resupply cadence.

“Providing multiple methods for us to maintain the station altitude is critically important as we continue to operate and get the most use out of our limited launch resources that we do have. We’re really looking forward to demonstrating that capability with (CRS-33) showing up after we get through the Crew-11 and Crew-10 handover,” Spetch stated.

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