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.
Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple, Ford, and General Motors. The Motley Fool owns shares of Apple and Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.