I have a skew to TSLAQ, but I think this whole thing is way more complex than I understand, and I am open to changing my mind. Anyway, I was discussing with a friend about Tesla margins.

My basic framework of why they are so high is that:

• There is a significant demand for Teslas currently, so they keep hiking prices
• Elon Musk is a very excentric personality, so Tesla doesn't spend on marketing
• Tesla has no dealerships, so it can keep the profit
• They are likely some years ahead in terms of manufacturing capability
• Maybe they cut some corners with stuff they shouldn't
• They sell expensive high-end cars

The basic things I believe of why this will change in the future

• Demand: As they hike production and the installed capacity increases, eventually all the hardcore fans will own a Tesla, the waiting lines will shorten and they will have to sell to people who compare more. This will mean being more competitive with prices and possibly having inventory.
• Advertising: It is possible that if Tesla wanted to keep the company at its current size, they wouldn't need to spend on ads ever. But as they ramp up the company, they'll inevitably need to spend on ads. Also, Musk and Tesla are different entities, and Musk charges heavily for his personality (as he did with the 2018 plan), so maybe you need to pay recurring big bonuses for Musk to continue to be the face of the company. Also, there's the risk of Musk growing bored and focusing on his other stuff (philanthropy, SpaceX, Twitter, making kids) and no amount of money being enough to keep him.
• Dealerships: Here I don't understand completely. As far I understand, there's big regulatory capture here in many jurisdictions, particularly in the US, to keep the dealers. Also, it seems something that as the competition figures out how to get rid of the dealers, this will all become customer surplus. Maybe incumbents won't be able to figure out it, but maybe new competitors will (Rivian, Apple, Smartphone OEMs, Chinese OEMs...), because they also won't suffer from GM/F/STLA/VW innovator's dilemma.
• Manufacturing capability: Battery is a big piece of the car and it seems that if you call CATL/LG/Panasonic and buy some, they'll deliver. On the technology side, companies like Qualcomm and Mobileye are working to create one-stop shops on the technology. Even companies like Foxconn are working so that eventually we have fabless OEMs. One anecdote recurringly brought about Tesla's manufacturing acumen is the pressing machine. But the company that produces it is a small Italian company that doesn't have $1B in market cap. It's hard to believe that there's a moat in something like that. I am not saying that Tesla isn't ahead of the curve, just that this should inevitably erode.
• Tesla cut corners: Here the outcome should be that the Tesla brand erodes. I don't think this is happening, at least because of this.
• High-end cars: They will eventually need to go downmarket, just because the high-end market isn't that large. And these cheaper cars will be sold at a lower price and margins.

Another argument is that even if their automotive margins erode, people will pay $600/year for ADAS will make up for it over the long term. I don't know how to think about it. It causes me a significant surprise that Tesla sells ADAS software as a lump-sum payment these days instead of a subscription, something that basically no one does with software anymore. (I am kinda skeptical that they will achieve autonomy, but it seems to be a nice ADAS. But it seems to me it should be something that comes with the car, not a subscription. To compare, it would be like if Microsoft charged you a subscription if you wanted to use the internet when you buy a Windows.)

I would like to listen to the sub views on each of these themes.