Is Tesla Profitable? And, Do other Car Manufacturers really want to Produce Electric Cars?

Tesla's Veiled Swipe At The Chevy Bolt

When I was going through the Q4 2017 Tesla shareholder letter for a recent article, what might seem like a minor comment caught my attention. Tesla wrote, "We incorporated all the learnings from the development and production of Roadster, Model S, and Model X to create the world's first mass market electric vehicle that is priced on par with its gasoline-powered equivalents - even without incentives."

From article, (Some people might be inclined to step in here and say that Tesla isn’t profitable so is also losing money on the Model 3. That’s disingenuous and those people know it, or they have hugely inflated expectations of the cost of Tesla batteries and other components. It also assumes CEO Elon Musk is lying to shareholders, which is a crime. Tesla isn’t profitable because it is pumping money as quickly as it can into growing the company — new products, new factories, more sales channels, more service and charging centers, etc. If Tesla wanted to sit back and stop growing, it could start making a profit fairly easily. But it wants to grow, and quickly, and its shareholders want the same from it.

the Model 3 is set to be the first mass market electric vehicle that can outcompete comparable gasmobiles. That means, in part, that Tesla is doing a better job at designing and manufacturing electric cars in a cost-effective and compelling way — while expanding its critical Supercharging network. Combined with comments from large automaker executives about the costs of producing electric cars, all of that also implies Tesla will continue to grow its leading position in the electric vehicle market for at least the coming few years — until these other automakers are producing mass market electric cars that strongly compete in their classes according to people who don’t care about these notable electric benefits.

I recently heard from a former GM exec that he expects the electric + hybrid market in the US to remain quite small. He doesn’t expect there is actually that much demand on the market for the Model 3, even before you het to his skepticism about Tesla’s ability to build it at the fast pace targeted. Furthermore, he indicated that large automakers don’t want to produce and sell very many electric cars because they lose money on them. If you’ve got companies that feel like they can’t make money on a product and don’t really want to sell it in high volumes yet, and then you’ve got a company that can make money on the same type of product and does want to sell it in high volumes, what do you think is going to happen in that market?)

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