Roadster Gross Profit Margin (%)

30
25
20
15
10
5
0
2011 1 2

13

14

15

16

17

18

19

20

21

22

Tesla began sales of the Roadster in 2009. Due to a delay in the ramp up of production, margins could not reach the level
envisioned at the start of the year. In 2012, the gross margins stood at a mere 4.2%. However, the margins rebounded to
22.3% in 2013, helped by higher volumes and operational efficiencies.
We believe, based on guidance from management, that the company will be able to achieve gross margins of around
30% on the vehicle in 2024. Once Tesla is able to source batteries from its gigafactories, there could be a further upside to
the Roadster's gross margins.
Forecast Rationale
Supporting:
1. TESLA CAN COMMAND HIGHER MARGINS ON THE ROADSTER DUE TO ITS HIGH PERFORMANCE AND QUALITY DESIGN –
The Roadster has received widespread acclaim for its design and does 0-60 mph in an impressive 3.7 seconds. This
allows Tesla to command a high margin on the Roadster, in the range of other top end sports cars.
2. DECLINING BATTERY COSTS – The costs of electric vehicle batteries are expected to decline substantially over the
course of this decade due to improving technology and battery makers achieving economies of scale. Batteries make
up a substantial portion of the total manufacturing costs of EVs, and a decline in these costs can considerably boost
margins.
3. According to a 2012 McKinsey study, the price of a lithium-ion battery pack could drop from $500-$600 per kiloWatt
hour(kWh) to about $200 per kWh in 2020 and $160 by 2025.
4. ECONOMIES OF SCALE – Once Tesla ramps up production of the Roadster to the expected level, costs will be
substantially reduced due to economies of scale, thereby leading to higher margins.
Sources for historical data and explanations can be found on the Trefis.com website (link)
Total Revenue (Bil $)
Model S Capex allocation (% of total)
Roadster (% of total)

2011
0.18
52.1
57.8

TREFIS ANALYSIS for TESLA MOTORS

2012
0.07
38.5
66.5

2013
0.01
11.5
87.9

2014
0.00
N/A
N/A

2015
0.00
N/A
N/A

2016
0.00
N/A
N/A

CONTENT@TREFIS.COM

2017
0.00
N/A
N/A

2018
0.00
N/A
N/A

2019
0.79
6.18
94.7

+ 1 617 394 8763

2020
1.20
7.04
93.6

2021
1.59
6.16
94.4

2022
1.73
5.26
95.2

•22