Two billionaire businessmen were agreeing with each other on Twitter. Anand Mahindra, Chairman of the Mahindra Group, was found seconding something Tesla founder and CEO Elon Musk had said about car production.
On Monday, Musk replied to a piece about volumes of production when it comes to the company’s cars. He had said, “Production is hard. Production with positive cash flow is extremely hard,” his few words generally say all in his style with social media, but this time he went ahead and elaborated his statement.
He explained that the real money in the car business is not even the cars at all, it’s the replacement parts that people eventually end up needing, “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. Like razors & blades. New car companies lack this advantage. Also lack sales & service infrastructure.”
“You said it, Elon Musk. And we’ve been doing that for decades now. Still sweating & slaving away at it,” replied Indian billionaire the chairman of the Mahindra and Mahindra group to Musk, before going on to say, “It’s our way of life….”
The piece in question, from the tweet that made the two car manufacturers so introspective, was an excerpt from the new book from James Dyson, the famed billionaire, inventor, entrepreneur and founder of Dyson Limited. Dyson had highlighted how the company was trying to build an electric car but was unable to do so due to the high costs of production and runoff costs.
Tesla recently expanded its horizons and is in the middle of setting base in India, but faces challenges to procure hardware reasonably before it can start production.
Mahindra and Mahindra, on the other hand, reported a 17% rise in passenger vehicle sales in the domestic market in August compared with figures from the same month in 2020.
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