A quote from an industry analyst in the article: "No car company can live off 20,000 to 30,000 sales a year and be profitable in the long term."
Is this true?
Is this true?
Lamborghini sells under 2500 a year.
Chalk this article up to careless punditry, i.e. what you get from an ad-driven internet news model.
Edit: just for kicks, I looked up Rolls Royce, which is kind of the canonical "luxury car". Under 4000 cars a year.
All of these cars use technologies funded by or borrowed from their parent. Lamborghini was seriously behind the cutting-edge when VW bought it, now they are catching up (last independently made Lambos had tubular frames).
One of the smallest independent automaker is Mazda, it produces around 1.2M cars per year, they can afford this because they're really innovative.
Tesla has some leeway for now as electric engines are significantly simpler than modern combustion engines, as the latter are extremely difficult to design because of environmental regulations (especially European ones). Designing a nice interior or rigid chassis is simpler than operating a naturally aspirated V10 in the E90 M5 that has an Euro5 cert..
Lamborghini belongs to Volkswagen (as do Bentley, Bugatti and Porsche).
Rolls Royce belongs to BMW.
None of these except for Porsche were viable on their own. At the very least, they need R&D for engines and other components from their parent, but usually much more.
In many cases, they are viewed more as a branding exercise by their parent companies, somewhat like luxury brands like the Phaeton (VW) or Maybach (Mercedes), which are also usually not profitable.
The FT says McLaren[2] expected to break even in 2013 on sales of 1,500 vehicles (but lost £10.9 million the year before).
Of course, making profit one year having made a loss the last doesn't exactly prove long term profitability.
[1] https://en.wikipedia.org/wiki/Bentley [2] http://www.ft.com/cms/s/0/e6074856-2776-11e3-ae16-00144feab7...
http://en.wikipedia.org/wiki/McLaren_P1
Interesting that all of the latest hypercars (P1, 918 and LaFerrari) are all hybrids.
Obviously Tesla isn't quite in the same market as those companies but that still demonstrates the point.
If you have a sub-$100k car then you generally do want higher sales volume in a fleet. If you look at, for example, Audi they have a mix of cars at a variety of price-points, which enables them to amortize development costs of shared components. That effectively raises the profit margin on their luxury margins (since the development of stuff like the frame, most of the engine, etc. is payed for by sales of the down market models).
Those kind of investments both enable and require Tesla to sell a much more mainstream cars than the Porsche of electric cars.
http://www.nytimes.com/2008/10/31/business/worldbusiness/31n...