Elon Musk on how car companies make money, Anand Mahindra replies back – Times of India

Tesla CEO Elon Musk recently spoke about how big car companies operate and make money. In a response to a tweet, Musk said that making cars is difficult a tough nut to crack. Musk said that, “Production is hard. Production with positive cash flow is extremely hard.” He further broke down how car companies make money, “Large incumbent carmakers sell their cars at low to zero true margin. Most of their profit is selling replacement parts to their fleet, of which 70% to 80% are past warranty.”
Musk’s tweet elicited a response from Anand Mahindra, chairman of Mahindra and Mahindra. The Indian industrialist replied to Musk saying that what he was saying is something Mahindra has been doing for years. “And we’ve been doing that for decades now. Still sweating & slaving away at it. It’s our way of life…”

In his tweet about how car companies make money, Musk further explained that the situation is “like razors & blades. New car companies lack this advantage. Also lack sales & service infrastructure.”
Clearly, Mahindra agrees with Musk’s rather concise explanation of the challenges that car companies face — be it in India, Europe, US or any other part of the world.
Meanwhile, another Indian company — Tata Motors — is making noises over Tesla’s entry in India. Musk had recently said that although Tesla really wanted to drive in the Indian market, there were many issues. The biggest one was import duty which would make Tesla cars prohibitively expensive and was a deterrent for Musk to launch in India. There were reports about the government of India considering reducing that duty. However, Tata Motors is against the idea as it’s making. Apish for car parts to be made in India.
Tesla’s entry into India has been on the table for many years now but it’s still not clear when and if Elon Musk drives his electric cars in the country.