Far behind in terms of sales, but the net profit per Tesla car is 8 times that of Toyota

A recent analysis shows that, in the July-September quarter, even though giant Toyota Motor sold seven times more sales than Tesla, its profit per car was eight times higher. for each Toyota vehicle. This is also the first quarter that the US automaker’s net profit has surpassed the Japanese giant since its listing in 2010 until now.

For the past quarter, Tesla’s profit stood at $3.29 billion. Meanwhile, Toyota’s profit stood at 434.2 billion yen – at current exchange rates that equates to $3.15 billion ($138 to $1). Even so, Toyota’s operating profit was still higher than Tesla’s, reaching $4.08 billion compared with the rival’s $3.69 billion. However, in addition to increasing the cost of input materials, last quarter Toyota also had to shoulder a large cost – up to 96 billion yen – when closing the factory in Russia.

Also in the last quarter, Toyota sold 2.62 million vehicles, 7.6 times more than Tesla’s 344,000. So Toyota only made a net profit of $1,200 per vehicle — one-eighth of Tesla’s $9,570 per vehicle.

But Toyota is not the only one behind the American electric car company. According to industry experts, Tesla is currently the car company with the highest net profit per vehicle in the auto industry, surpassing other giants like Mercedes-Benz. Tesla’s net profit margin per vehicle hit 15% in the last quarter.

This profit disparity has been clearly reflected in the eyes of investors when Tesla’s market capitalization is currently at $617 billion, nearly three times Toyota’s $220 billion.

The gap between market capitalization and profitability also shows the difference between the strategies of these two automakers. While Toyota offers a wide range of vehicles, from gasoline to hybrid, to electric as well as to fuel cell vehicles, in a variety of models and sizes, Tesla only produces fully electric vehicles with The Model Y and Model 3 lines account for 90% of their sales.

Sales of these two models have nearly doubled in the past two years, despite their relatively high prices compared to petrol cars. Even the entry-level Model 3 is priced at around $40,000 in the US. Confident with the attractiveness of its strong brand, Tesla can increase selling prices to absorb high input prices. In addition, they also have a significant income from selling expensive self-driving car software to set themselves apart from other competitors.

In addition, Tesla has many other ways to cut costs. For example, to manufacture its chassis, Tesla installs giant Giga Press molding machines that speed up mass production and reduce unnecessary assembly steps for the chassis and associated costs. In addition, Tesla also sells directly to users through an online channel, a method that helps bring higher profits than selling through dealers.

Toyota has also set a target of selling 3.5 million electric vehicles by 2030, but currently only the bZ4x model is the only model to be mass-produced. During an earnings call on November 1, a top Toyota official said the company is looking at other options for mass-producing electric vehicles.

Refer to Nikkei, Forbes