A big a part of Tesla’s progress in gross revenue final quarter got here from a rise in income from servicing Tesla’s automobiles and promoting power via its Supercharger community – issues Elon Musk mentioned Tesla wouldn’t intention to make income from.
Again in 2016, Elon Musk was quoted saying this at a Tesla occasion when defending the automaker’s technique to function its personal service facilities relatively than utilizing dealerships:
Our philosophy with respect to service is to not make a revenue from service. I believe that it’s horrible to make a revenue on service.
Musk typically criticized different automakers, particularly GM, for promoting “automobiles that then want service” at dealerships after which making a number of income promoting alternative components to prospects via these dealerships.
The CEO is usually quoted saying, “One of the best service isn’t any service,” and Tesla goals to enhance service by rising the reliability of its automobiles, leading to much less want for service.
Actuality is kind of totally different. Tesla homeowners are sometimes experiencing lengthy wait occasions to get service appointments at Tesla and the way the automaker plans to handle this case was a prime query throughout Tesla’s earnings name yesterday.
As for the Supercharger community, Musk additionally mentioned that it will “by no means turn into a revenue heart” for Tesla.
The CEO at all times mentioned that the charging community’s aim was to be a service for Tesla homeowners, and now non-Tesla homeowners, with the aim of revisiting income to develop the community’s capability.
Tesla’s actuality is altering
Over the past two quarters, Tesla’s income from “companies and others” have surged.
For the previous couple of years, Tesla’s companies and others have been solely marginally worthwhile, which was consistent with Musk’s beforehand acknowledged technique on that entrance, however one thing has modified.
With Tesla’s Q3 2024 monetary outcomes, the automaker mentioned that “companies and others” gross income jumped to virtually $250 million – a 90% enhance year-over-year:
Tesla is among the most opaque automakers in the case of breaking down its financials. It bundles many issues into “companies and others, ” making it laborious to know precisely what’s going on inside.
The majority of that accounting line has traditionally been automotive service and used automotive gross sales, however in Tesla’s newest monetary outcomes, which noticed an necessary enhance in income for “companies and others”, the automaker confirmed that the surge was particularly as a result of its Supercharger community and repair margins:
The Providers and Different enterprise achieved a report gross revenue in Q3, rising over 90% year-on-year. Sequential progress in gross revenue was pushed principally by increased gross revenue technology from supercharging, service heart margin enchancment and better gross revenue technology from Elements Gross sales and Merchandise.
Now at $~250 million, it’s nonetheless a small a part of Tesla’s general gross income, however it does account for a big a part of the ~$800 million enhance in gross income in comparison with final 12 months.
Electrek’s Take
That is one thing that irritates me personally as a result of I’ve used these quotes from Elon about service to counter the hesitation of many potential Tesla consumers relating to the upkeep and repair of electrical automobiles.
Elon’s assertion reassured them, but when that was ever actually the plan, it actually isn’t anymore based mostly on the most recent outcomes.
Tesla’s gross margins for service and promoting alternative components are surging, and Tesla is proudly saying it in its monetary outcomes.
Myself, I’ve two Tesla automobiles that want service proper now and Tesla is attempting to promote me very costly components.
As for Supercharger, costs are going up.
To be truthful, Tesla creating wealth on the Supercharger community is kind of new and the corporate is simply beginning to promote extra charging to non-Tesla EVs. It’s very attainable that Tesla may want to regulate to maintain the Supercharger simply marginally worthwhile.
It’s simply the truth that Tesla writes “sequential progress in gross revenue was pushed principally by increased gross revenue technology from supercharging,” it’s not tremendous encouraging.
However within the meantime, some Supercharger stations are getting fairly costly. Hopefully, Tesla will get these costs into management
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