**Summary:**

In this video, the speaker delves into the importance of Tesla's profit margins. He discusses the impact of fixed costs, variable costs, and economies of scale on profit margins. The speaker analyzes how Tesla's factories in Shanghai, Berlin, and Austin are affecting profit margins due to different levels of production. He also explores the potential impact of increased production and the rollout of full self-driving features on Tesla's profit margins in the future. The speaker outlines a hypothetical scenario where Tesla could achieve a substantial profit margin through increased production and subscription-based services.

**Detailed Article:**

The video focuses on the significance of Tesla's profit margins, shedding light on various factors that influence these margins. The speaker starts by highlighting Tesla's gross profit percentages of around 29% in the first quarter and 25% in the second quarter, attributing the dip to lower production levels and fixed costs. He explains that fixed costs remain constant regardless of production volume, while variable costs increase with higher production. This understanding forms the basis of how profit margins can be influenced by production levels.

The speaker discusses the impact of Tesla's Shanghai factory, emphasizing the increase in production after overcoming initial setbacks due to shutdowns. He mentions Tesla's Berlin and Austin factories, labeling them as cost-intensive ventures initially due to low production levels, which leads to higher per-unit costs. However, he anticipates that as production scales up, these factories can contribute positively to Tesla's profit margins.

Furthermore, the video explores the potential boost in profit margins if Tesla achieves higher production rates, such as aiming for 5,000 cars per week from the Berlin factory by year-end. The speaker emphasizes how increased output from various factories can significantly impact Tesla's overall profit margins, especially considering relatively stable fixed costs.

Moreover, the discussion touches on the revenue from full self-driving features, which currently sits on Tesla's balance sheet. Once this revenue can be realized, the speaker anticipates a further surge in profit margins, noting the absence of additional associated costs with this revenue stream.

In conclusion, the speaker extrapolates on the possibility of Tesla achieving unprecedented profit margins, potentially reaching 50% in the future. He speculates on the role of subscription-based services, software packages, and a growing subscriber base in enhancing Tesla's profit margins. By offering services beyond traditional car sales, Tesla could broaden its revenue streams and significantly boost its profitability, setting the stage for substantial growth in the coming years.

So basically, from what I understand, the more units they produce, the more they save on the plant!

if they get to that 50% profit margin it will be great for them

I think the profit margins will continue to go up for Tesla. Aren't they also dropping the Germany plant because they wanted to take some of the government money for building it in the US? I don't recall all the details regarding that.

Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@jfang003/re-taskmaster4450le-6cqx5b)

<center>![pixresteemer_incognito_angel_mini.png](https://files.peakd.com/file/peakd-hive/pixresteemer/8h7BBw1w-pixresteemer_incognito_angel_mini.png)</center><center>Bang, I did it again... I just rehived your post!</center><center>Week 123 of my [contest](/hive-179017/@pixresteemer/the-re-hive-contest-results-week-122-and-start-week-123) just started...you can now check the winners of the previous week!</center><center><sub>14</sub></center>