Tesla Inc. CEO Elon Musk on Wednesday said the electric vehicle company’s operating expense is “embarrassingly high.”
What Happened
The billionaire entrepreneur was reacting to a Twitter post that compared Tesla’s first-quarter operating expenses with that of Rivian Automotive Inc.’s from its fourth quarter.Tesla reported $1.86 billion operating expense in the first quarter, a year-on-year jump of 15 percent. Rivian’s fourth-quarter operating expense was $2.07 billion.
In 2021, Tesla reported operating expenses of $7 billion, while Rivian’s came at $3.75 billion. The Musk-led company’s adjusted gross margin was 27 percent in 2021.
Besides rent, inventory costs, marketing, research and development, and payroll, operating expenses also include day-to-day business operations.
Tesla reported first-quarter financial results on Wednesday. Rivian is due to report earnings on May 11.
Why It Matters
Tesla’s operating expenses have risen significantly over the past three years due to higher SG&A components. The EV maker, however, spends nothing on advertising and sells its vehicles online, unlike legacy players who rely on dealers.Tesla reported operating expenses of $4.1 billion in 2019 and adjusted gross margins of 18.9 percent.
By Rachit Vats
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