Indian Industrialist Anand Mahindra has seconded Tesla founder Elon Musk’s statement that production of cars with a positive cash flow is extremely hard.
Elon Musk replied to a tweet that had shared the story of British tech major Dyson’s ambitious project of developing an electric vehicle that failed. Musk said that “Production is hard. Production with positive cash flow is extremely hard.”
To this, Anand Mahindra quote tweeted Elon Musk’s comment and said that it’s their way of life as they have been doing this for decades.
Also Read | Tesla delays Cybertruck to late 2022: Musk
“You said it, @elonmusk and we’ve been doing that for decades now. Still sweating & slaving away at it. It’s our way of life…” Mahindra said.
Elon Musk went ahead and explained the difference between production and production with positive cash flow. He took the example of razors and blades and said that carmakers sell their cars at little or zero margin but just like selling razors but make money off of selling replacement parts, like blades.
“Large incumbent carmakers 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. Like razors & blades. New car companies lack this advantage. Also lack sales & service infrastructure.” Musk said.
Also Read | Tesla may release $25,000 electric car without a steering wheel in 2023
British Household appliances company Dyson took up the project to manufacture an electric car from scratch with a budget of $700 million. But soon after developing, the company realized that “at a relatively low volume, we would have to sell the car at $210,000.”
