Tesla Earns 8 Times More Profit Per Vehicle Than Auto Industry Volume Leader Toyota

Toyota Motor Corp. TM is the world’s largest automaker in terms of the number of cars but pureplay electric vehicle maker Tesla Inc. TSLA is way ahead of the legacy automaker in terms of profit generated per vehicle sold.

What Happened: Tesla’s GAAP net income for the September quarter was $3.29 billion compared to the 434.26-billion-yen ($3.15 billion) profit Toyota made for the same period, an analysis by Nikkei showed. The JPY-USD conversion is based on the 138 yen per dollar value that prevailed at the time Toyota released its quarterly results.

Tesla sold 343,830 cars in the third quarter compared to Toyota’s 2.62 million, with the Japanese automaker outselling Tesla by 7.62 times. However, the U.S. EV giant tops Toyota when profit per vehicle is taken into account.

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Profit made per vehicle in the third quarter was at $9,569 for Tesla compared to $1,202 for Toyota. Tesla, thus, makes about eight times more profit on a car than Toyota. Tesla’s leadership in market capitalization reflects this competitive edge the company has over its rivals, Nikkei said.

As of Friday, Tesla’s market capitalization stood at $618.824 billion, a far cry from its peak valuation of $1.235 trillion seen in early November 2021. Still, the company leads the auto industry on this metric. Toyota is a distant second with a market cap of $196.087 billion.

Why It’s Important: Tesla’s cost efficiency partly reflects the low cost of manufacturing for its Made-in-China vehicles churned out by its Giga Shanghai. About half of its global deliveries come from the plant.

Another factor working in favor of the company is the strong market share it commands. Demand for the company’s vehicles remained robust despite the multiple price hikes the company announced earlier this year and in 2021 in response to the input price inflation.

That said, the recent economic softness has proved challenging for Tesla. Analysts have begun calling out a demand slowdown in China. A recent Reuters report said Tesla is mulling exporting MIC cars to North America amid a slowdown in domestic demand, although CEO Elon Musk has denied any such move.

Price Action: Tesla closed Friday’s session at $195.97, up 2.75%, according to Benzinga Pro data.

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