Tesla earns 8x more per car than Toyota

Posted on November 15, 2022 by Peter McGuthrie

Tesla has gone from a startup electric vehicle (EV) company to a power player in the auto industry in just a few decades. And while the company hasn’t been immune to the effects of the global economic downturn currently facing many industries, comparisons between Tesla and legacy automakers are showing promising earnings — even against auto industry classics like Toyota.

Above: A Tesla Model 3 in a parking garage. Photo: Austin Hervias / Unsplash

Tesla earned eight times as much per car as Toyota during this year’s third quarter, according to a report from electrek. The news comes despite Toyota delivering around eight times as many vehicles as Tesla, although both posted similar earnings for the quarter.

While Tesla reported $3.29 billion in net profit during the third quarter, Toyota earned just 434.2 billion yen (~$3.15 billion USD) — despite delivering around eight times as many cars. The news is perhaps even more impressive when considering Toyota’s past investment in Tesla, which would be a drop in the bucket today for the U.S. automaker.

Just a decade ago, Toyota owned a three-percent stake in Tesla which was purchased with a meager $50 million investment. Today, Tesla generates around $50 million in free cash flow every couple of days. Toyota divested from Tesla completely in 2017 and it has since cut ties with the electric vehicle manufacturer.

In the past, many auto investors preferred to invest in legacy automakers, since they could deliver millions more vehicles than a startup company like Tesla. More vehicles simply implied greater profits, and the rule of thumb was largely true before Tesla’s vehicles and EVs in general began gaining mainstream appeal.

Toyota still delivers many more vehicles than Tesla, but its earnings are less per car and it’s only now starting to dip its toes into the emerging EV sector — an area that Tesla has easily dominated over the last few years.

Still, the news of Tesla out-earning Toyota in Q3 shouldn’t come as too much of a surprise. For one, Toyota faced what it called “increased material and electricity costs for its suppliers,” causing its earnings to drop quite significantly in Q3. Additionally, Tesla’s car business isn’t its only source of income.

Some predict that the trend may continue, especially as EVs become more popular amongst consumers in the coming years. And most legacy automakers, Toyota included, still have a ways to go to catch up to Tesla’s dominant market share in the EV sector.

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Source: electrek

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Posted in Electric Vehicles, Q3 Earnings Call, Tesla, Toyota


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