Part 5/8:
Managing Costs vs. Selling Prices
While ASPs have dipped, Tesla has managed to lower its cost of goods sold (COGS), which could potentially stabilize automotive gross margins moving forward. The discussion highlighted the relationship between ASPs and COGS, indicating that while manufacturers strive for efficiency, the challenge lies in offsetting any price decreases with reduced production costs.
Analysts are closely monitoring automotive gross margins, particularly as regulatory credit value dynamics come into play. Various automobile industry players, including Honda and Nissan, have yet to scale production significantly to meet regulatory standards, thus maintaining demand for Tesla’s regulatory credits.