Part 5/10:
James notes that Tesla’s profitability is increasing due to operational efficiencies—specifically, the company is ramping up manufacturing technologies like Giga castings, structural battery packs using 4680 cells, and cutting costs associated with sensors and wiring. These efficiencies are expanding profit margins even as revenue growth slows or remains steady.
He illustrates that much of Tesla’s revenue comes from automotive sales, but over time, revenue from regulatory credits has become less significant for profit—though still a source of income. Tesla’s ability to grow earnings faster than sales signifies increasing profitability per vehicle, aided by these technological and manufacturing advancements.