Tesla aims to reduce its production costs, and strives to increase its profit margin

by AatoMobil

Tesla has emerged to become one of the most valuable car companies having an estimated net worth of INR $1.6 trillion. Sources suggest that the average cost of manufacturing a car sums up to $36,000. The entrant in Tesla’s lineup, the Model-3 costs $44,990. The Model Y costs $60,000, and the Model S, and X start at $95,000, and $105,000 respectively.

The fact of the matter is no car costs below $50,000, considering that the production costs on average sum up to $36,000, Tesla would want to cut down its production costs. To achieve this, Tesla will rely on the new battery technology which is under development. Tesla also plans to use a lesser number of battery cells to achieve a lower production cost. The company also saves money on advertising, as the American-based company does not shell out any money for advertising.

All these cost-cutting methods would boost the overall profit margin. Currently, Tesla is amongst the top companies that generate the highest turnover. In its early stages, skeptics argued that the brand would not turn out to be a profit-making company as the infrastructural costs to build an EV is high. This is a major reason why not all manufacturers are adopting the electric ecosystem. Tesla has turned out to be a sustainable EV model, this should definitely inspire manufacturers to opt to go electric.

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