How much does it cost to produce a Tesla? Way below sticker price.

Tesla’s earning report last week showed record growth in profitability and vehicle production and output, despite the volatility of 2021.

A key part of making that happen? Reduction in vehicle costs and ramping up levels of production.

The electric vehicle company managed to increase production of cars to 305,840 in the Q4 2021, showing 83% growth compared to the same period last year, according to its earnings reports. On top of that, Tesla managed to nearly double profits from its automotive business, from approximately $7 billion  to nearly $14 billion in 2021.

An important driver, Tesla says in its earnings report, was a decrease in vehicle production costs. In fact, the average cost of making a Tesla vehicle fell to just $36,000 in both Q3 and Q4 2021. The figure is denoted as COGS, or cost of goods sold, in the earnings report, which means it only takes into account the direct cost of producing the vehicle and not the cost of sales and marketing, which could add to those expenses.

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In fact, the cost of making the average Tesla vehicle is far below the sticker price of even its cheapest model. A base Model 3 sedan costs $40,690, while its higher-end Model S starts at $89,500 and the top-of-the-line Model X SUV goes for nearly $100,000.

“Tesla delivered stellar top and bottom-line results which beat expectations across the board with major EV demand tailwinds into 2022,” Daniel Ives, managing director of Wedbush Securities, a New York-based wealth management, brokerage and advisory firm, tells USA TODAY in an email.

The results were all the more impressive given the chip shortage and logistical issues that are still ongoing across the auto industry, Ives points out.

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Production in Tesla’s new Austin, Texas, factory is also ramping up, leading analysts like Ives to predict even more growth from Tesla into 2022. Its 2021 earnings reports show that it delivered nearly 940,000 vehicles in 2021, a new record surpassing last year’s sales record of 509,737.

Tesla’s market cap, the total dollar market value of the company’s outstanding stock, soared to $1 trillion in late October 2021, after rental car company Hertz, which filed for Chapter 11 bankruptcy protection early in the COVID-19 pandemic, announced that it plans to buy 100,000 cars from Tesla by the end of 2022 in a pivot toward electric vehicles.

Tesla vehicle owners are also able to take advantage of rebates, which vary from state to state for electric vehicles. On top of that, President Joe Biden’s new infrastructure legislation expanded electric vehicle infrastructure, potentially making Tesla vehicles more appealing to consumers.

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Michelle Shen is a Money & Tech Digital Reporter for USA TODAY. You can reach her @michelle_shen10 on Twitter.