The gross margin goal of Tesla Motors Inc (NASDAQ:TSLA) has been set at 25 percent by the end of the year, and CEO Elon Musk says that over time, it will even approach, if not surpass, that of Porsche Automobil Holding SE (ETR:PAH3) (FRA:PAH3).
Can Tesla Meet Or Pass Porsche’s Gross Margins?
Bloomberg’s Alan Ohnsman reported on the automaker’s annual meeting this week, which is where Musk made the comment. Porsche’s gross margin on its luxury sports cars had more than 50 percent before it was acquired by Volkswagen AG (XETRA:VOW) (FRA:VOW). Now Porsche’s gross margins aren’t publicly announced apart from Volkswagen’s margins.
One of the issues many see standing in the way of Tesla achieving Porsche’s gross margins is capital expenditures, and Musk admits that the company’s capital expenditures will be higher than those or Porsche for some time. Currently Tesla Motors Inc (NASDAQ:TSLA) is in the process of not only expanding the production of its Model S but also beginning to assemble the Model X, which is basically the company’s SUV.
Tesla's Other Plans
Tesla Motors Inc (NASDAQ:TSLA) announced recently that it would also expand its supercharger network throughout North America over the next year. Musk said at the annual meeting that they would be willing to allow electric vehicles from other automakers to use their superchargers, although compensation would be required in order for the company to consider it.
According to Musk, last month’s fundraising has put Tesla Motors Inc (NASDAQ:TSLA) “in great shape” in terms of cash positioning. He basically said the extra cash gives the company some leeway in the event that its cash management isn’t perfect in the near term as it expands production.
Tesla's Stock Price
Shares of Tesla Motors Inc (NASDAQ:TSLA) have been falling steadily amidst debate about whether their value can keep going up because of the tear they’ve been on. Today the automaker’s stock dropped as much as 4 percent in value.