Tesla Motors Inc.'s Automotive Gross Profit Margin May Exceed 25%

The automotive industry is well known for its unimpressive profitability. But automotive start-up Tesla Motors (NASDAQ: TSLA  ) has guided for a whopping 25% gross profit margin in Q4. That easily trumps Ford's 15.5% gross profit margin and General Motors' 12%. Is Tesla overly optimistic?

Not at all. In fact, Tesla could easily exceed its goal for a 25% gross profit margin in Q4. Fool contributor Daniel Sparks discusses why 25% gross profit margins are basically in the bag for the company in the video below. He also explains exactly how the company comes up with its automotive gross profit margin figure. Though it's a non-GAAP figure, Daniel asserts that it offers investors solid insight into Tesla's profitability.

Check out the video below to hear Daniel's thoughts on Tesla's gross profit margin.

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  • Report this Comment On February 17, 2014, at 1:44 PM, ralf914 wrote:

    You guys REALLY love Apple. Posting it's graph for Tesla.

  • Report this Comment On February 17, 2014, at 3:53 PM, Decoy0527 wrote:

    It's much easier to post a 25% gross margin for an auto manufacturer selling 6,900 cars per quarter to a niche market than it is to post a 12% gross margin for a high volume manufacturer. Also, bottom line does matter. Tesla's stock price seems to assume that it can maintain the 25% even when it is making 200,000 vehicles per year. I think that is unlikely, but time will tell.

  • Report this Comment On February 18, 2014, at 5:35 AM, JulianCox wrote:

    The kicker is that Q4 GAAP and NON-GAAP profits will pretty much converge due to EU deliveries.

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