Tesla CEO Elon Musk outlines how big automakers make money

Elon Musk

Elon Musk said that the large legacy automakers offer their cars at low to zero true margins.

As a response to a story about the failed attempt by the British technology company Dyson to construct an electric car, Elon Musk stated that the manufacturing of vehicles is an extremely difficult nut to crack.

“Production is hard. Production with positive cash flow is extremely hard,” Tesla CEO tweeted.

Elon Musk goes on to say that the large legacy automakers sell their vehicles at low to zero true margins. “Most of their profit is selling replacement parts to their fleet, of which 70% to 80% are past warranty,” Musk said. Musk illustrates his point with the use of razors and blades to illustrate his point.

“This is an advantage that new car companies do not have. “There is also a lack of sales and service infrastructure,” he continues.

Musk has told Tesla employees that he completely agrees with a recent price prediction made by investment management firm Ark Invest, according to a report by Bloomberg.

Ark Invest set a $3,000 pricing target for Tesla for 2025, estimating that the carmaker will be delivered between 5 and 10 million vehicles per year by then.

As reported by Electrek, Elon Musk stated during a company-wide conference call with employees that Tesla’s Cybertruck pickup has slipped around a year behind schedule.

Electrek cited unidentified sources who were on the phone with Musk, the truck is expected to begin production at the end of 2022 but won’t be produced in large quantities until late 2023. The CEO informed his employees that ramping up output will be difficult because of the amount of new technology that the company plans to incorporate into the pickup truck.

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