32.9 per cent profit margin
$Tesla(TSLA.US$
Tesla Inc's eye-popping profit margin has raised doubts among Wall Street analysts if the company would be able to keep at it amid rising commodity costs and higher expenses to increase production.
The world's most valuable automaker pocketed a hefty 32.9 per cent margin, more than double that of legacy firms including General Motors, Ford Motor Co and Stellantis, who too have been spending heavily for a share of the lucrative electric vehicle market.
Tesla's record margin that came on the back of higher prices is powering a nearly 9 per cent rise in Tesla's stock price on Thursday and has led at least five analysts to raise their price target, but with a warning.
Margin could come under pressure in the coming months as the spending on rampup at the plants in Berlin and Texas gradually becomes a part of cost of production and moves out of research and development expenses, they said.
"While the margins are impressive, some fear that they might be at their peak," said Julie Gillespie, head of market research at TipRanks.
Rising commodity costs too could eat into margins even though Tesla's price increases are designed to offset higher anticipated costs in the next six to 12 months.
The recent price hikes are for orders that are likely to be delivered a year later in some cases and could incur higher production costs, potentially squeezing the margins.
Tesla's lush profit margin raises sustainability doubts in Wall Street
Tesla Inc's eye-popping profit margin has raised doubts among Wall Street analysts if the company would be able to keep at it amid rising commodity costs and higher expenses to increase production.
The world's most valuable automaker pocketed a hefty 32.9 per cent margin, more than double that of legacy firms including General Motors, Ford Motor Co and Stellantis, who too have been spending heavily for a share of the lucrative electric vehicle market.
Tesla's record margin that came on the back of higher prices is powering a nearly 9 per cent rise in Tesla's stock price on Thursday and has led at least five analysts to raise their price target, but with a warning.
Margin could come under pressure in the coming months as the spending on rampup at the plants in Berlin and Texas gradually becomes a part of cost of production and moves out of research and development expenses, they said.
"While the margins are impressive, some fear that they might be at their peak," said Julie Gillespie, head of market research at TipRanks.
Rising commodity costs too could eat into margins even though Tesla's price increases are designed to offset higher anticipated costs in the next six to 12 months.
The recent price hikes are for orders that are likely to be delivered a year later in some cases and could incur higher production costs, potentially squeezing the margins.
Tesla's lush profit margin raises sustainability doubts in Wall Street
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