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Originally Posted by HotHotHeat
I'd love to hear more on this accounting issue you've discovered. What would their margins need to be to turn a profit? Sounds like you have the math pretty figured out.
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It's not something that I discovered, it's usually brought up whenever Tesla's gross margins are talked about without acknowledging its SG&A. For comparison using financial information from Google Finance , Toyota has a gross margin from 2016 of 20.4% but a SG&A of only 10.4%; Honda's gross margin is 22.4% and SG&A of 11.4%. For American companies, GM's is 12.8% and 7.0%, while Ford is 15.6% and 8.0%.
A good ratio between gross margin and SG&A is 2:1, with well-run Japanese auto manufacturers capable of 20%+ gross margins even when their product line is mass market. While some Tesla SG&A may be in preparation for the Model 3, the complaints about service backlogs and crowded charging stations during peak periods may indicate its SG&A spending is still inadequate.