Toyota's sales are seven times that of Tesla's, but the American manufacturer earned eight times more profit per vehicle than Toyota Motor in Q3 2022.
Tesla reported a net income of $3.29 billion in Q3. During the same period, Toyota earned 434.2 billion yen (about $3.15 billion). The Japanese automaker is now taking on increased material and energy costs for its suppliers. Higher material costs, including supplier assistance, pushed down quarterly operating profit, according to Nikkei Asia.
Tesla became one of the most profitable automakers in the world in Q3. Although its net profit in July-September was less than that of Mercedes-Benz, it outperformed BMW and Volkswagen. The net profit margin for the quarter was 15%.
This success of Tesla has a lot to do with the profitability of each of its vehicles. Toyota sold 2.62 million vehicles in the quarter, 7.6 times more than Tesla, which sold 344,000 vehicles. But, Toyota's net profit per car was about $1,200, while Tesla's was $9,570. Tesla leads the industry in net profit per vehicle sold, outperforming even Mercedes-Benz.
While Toyota offers a wide range of vehicles with different types of powertrains, Tesla has focused only on electric vehicles. The company has designed its vehicles in such a way that they become desirable not only for environmentally friendly transport enthusiasts, but also for those who want to drive in style. With only four, but highly coveted models in its lineup, Tesla is more comfortable raising prices to pass on higher material costs to customers.
“The biggest factor behind Tesla's profit growth is sales volume, then prices hikes and a rise in self-driving software sales,” said Koji Endo at SBI Securities.
In addition, Tesla strives to reduce the cost of production at every stage of assembly, which brings significant savings to each car. The company has developed the Giga Press, which reduces the number of parts in a vehicle, assembly steps, manpower, materials, and time. In addition, the direct sales model offers higher profit margins than selling through dealerships.
© 2022, Eva Fox | Tesmanian. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.