This is the Best Thing Tesla Did Last Quarter

Electric vehicle leader Tesla reported a significant cost of goods sold (COGS) metric in their Q4 2023 earnings results, showing their continued leadership in manufacturing efficiency. 

Tesla stated that their cost of goods sold per vehicle declined sequentially to just above $36,000 in the fourth quarter. This reveals major progress in Tesla’s efforts to optimize their production costs over time, allowing for possibility of higher margins.

Remarkably, Tesla achieved these cost reductions even as legacy automakers have generally seen rising COGS per vehicle over the past year due to supply chain challenges and inflationary pressures. This data came from MacroTrends.

Tesla noted that while they are reaching the limits of cost optimization on existing vehicle models, their teams remain dedicated to further cost cutting through manufacturing improvements, supply chain innovations, and designs that enable efficient production.

Our Thoughts

The ability for Tesla to keep driving down costs while maintaining their technology and quality leadership represents a key long-term competitive strength. As legacy automakers continues struggling with COGS inflation, Tesla extends their efficiency lead. Will Tesla be able to market and educate consumers on their products to achieve 50% year-over-year growth?

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