Tesla: Low Costs, Peer-Leading Margins

The operating margins of legacy automakers like Ford, General Motors, Volkswagen, and Toyota are usually well below 10%. On the other hand, the operating margins of new EV makers like NIO, XPeng, and Li Auto are negative currently.

Tesla's operating margins have risen well above that of its competitors. This is because the company is able to consistently reduce its cost of sales and operating expenses over time. The reason for its lower cost of sales is higher vehicle production over a single platform.

This has helped the company lower its long-run output cost. Its Selling, General and Administration expenditure has also reduced over time due to a decrease in employee and labor costs.