A major a part of Tesla’s progress in gross revenue final quarter got here from a rise in income from servicing Tesla’s autos and promoting vitality by means of 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 moderately 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 usually criticized different automakers, particularly GM, for promoting “vehicles that then want service” at dealerships after which making quite a lot of income promoting alternative components to clients by means of these dealerships.
The CEO is usually quoted saying, “The perfect service is not any service,” and Tesla goals to enhance service by rising the reliability of its autos, leading to much less want for service.
Actuality is sort of completely different. Tesla homeowners are sometimes experiencing lengthy wait occasions to get service appointments at Tesla and the way the automaker plans to handle this example was a prime query throughout Tesla’s earnings name yesterday.
As for the Supercharger community, Musk additionally mentioned that it could “by no means change into a revenue middle” for Tesla.
The CEO all the time mentioned that the objective was of the charging community was to be a service for Tesla homeowners, and now non-Tesla homeowners, with the objective of revinesting income into rising the capability of the community.
Tesla’s actuality is altering
During the last two quarters, Tesla’s income from “providers and others” have surged.
For the previous couple of years, Tesla’s providers and others have been solely marginally worthwhile, which was according to Musk’s beforehand said technique on that entrance, however one thing has modified.
With Tesla’s Q3 2024 monetary outcomes, the automaker that “providers and others” gross income jumped to virtually $250 million – a 90% improve year-over-year:
Tesla is likely one of the most opaque automakers relating to breaking down its financials. It bundles many issues into “providers and others, ” making it exhausting to know precisely what’s going on inside.
The majority of that accounting line has traditionally been automobile service and used automobile gross sales, however in Tesla’s newest monetary outcomes, which noticed an vital improve in income for “providers and others”, the automaker confirmed that the surge was particularly attributable to its Supercharger community and repair margins:
The Providers and Different enterprise achieved a document gross revenue in Q3, rising over 90% year-on-year. Sequential progress in gross revenue was pushed principally by larger gross revenue technology from supercharging, service middle 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 total gross income, however it does account for a big a part of the ~$800 million improve 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 patrons relating to the upkeep and repair of electrical autos.
Elon’s assertion reassured them, but when that was ever actually the plan, it definitely isn’t anymore primarily based on the newest 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 autos that want service proper now and Tesla is making an attempt to promote me very costly components.
As for Supercharger, costs are going up.
To be truthful, Tesla making a living on the Supercharger community is sort 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 larger 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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