New Delhi: Agreeing to Tesla CEO Elon Musk’s proposition that automobile production is a tough nut to crack and that generating positive cash flow is even harder, Indian industrialist Anand Mahindra said that “we’ve been doing that for decades now. Still sweating & slaving away at it. It’s our way of life…”
While replying to a story related to the British tech company Dyson’s failed attempt at building an electric car, Elon Musk on Tuesday said that the large legacy automakers sell their cars at low to zero true margins.
“Most of their profit is selling replacement parts to their fleet, of which 70% to 80% are past warranty,” Musk said. Musk gives an example of razors and blades to put his argument forward.
“New car companies lack this advantage. Also lack sales & service infrastructure,” Musk adds.
Last week, Mahindra & Mahindra (M&M) reported a 17 per cent increase in domestic passenger vehicle sales at 15,973 units in August as compared to the same month last year.
The company had sold 13,651 units in August 2020, M&M said in a statement.
Twitter users praised Mahindra’s resilience in the face of the adversity. “Only visionaries have the guts of doing so and that too with so much passion that can be seen in the impact it created amongst the society,” said a Twitter user.
One Twitter user also praised Elon Musk’s entrepreneurial tenacity, “Citing the zero or low margins of legacy car makers, big car companies make their profits not from the sales of their cars but from the sales of replacement parts like “razors and blades…Well Said.”
“Whole contentment comes from number of jobs you great guys are creating for number of people. Manufacturing with innovation is hard and hats off to you guys,” tweeted Sheela.