Since it went public in 2010, Tesla has not reported a single profitable year. This is despite soaring revenue, glowing reviews, and a skyrocketing stock price. For all the hype around electric cars, it doesn’t seem like a smart investment, but a rival firm believes Tesla is trying to propagate a myth that there’s no money in electric cars.

“If you’re leading the leading company in the world in electric cars, what you don’t want is for others to start following you,” Peter Rawlinson, the CTO at Lucid Motors and former lead engineer on the Tesla Model S, tells Inverse. “There’s a great myth that Teslas are not profitable. They’re hugely profitable. The Model S is hugely profitable. I know it is.”

That appeared to be confirmed by SpaceX’s Chief Technology Officer Tom Mueller earlier this month. During a Skype call with a group from the New York University Astronomy Society, Mueller claimed that Elon Musk told him the marginal cost to produce a Model S is $30,000. The base-level Model S starts at $68,000.

It wouldn’t be a surprise if Tesla wasn’t making money. Legacy automakers moving into electric, requiring new machines and expertise, have struggled to make money. It was revealed in November that General Motors loses as much as $9,000 on each Chevrolet Bolt. Fiat Chrysler executive Sergio Marchionne told a 2014 conference not to buy the Fiat 500e, and Morgan Stanley believes that Volkswagen could stay unprofitable while it transitions to electric cars through the late 2020s.

On the surface, it seems like Mueller’s revelation confirms Rawlinson’s assertion, but it’s not that simple. Marginal cost is the amount to produce each additional unit, and does not factor in the costs that came before. It answers the question of how much making another Model S costs, rather than showing how much the Model S on the street costs to make.

That’s important for understanding why Tesla doesn’t make money. The company has greatly ramped up production since the Model S launched in June 2012, from just 321 total vehicles in the third quarter of 2012 to a record-breaking 25,000 in the first quarter of 2017.

Tesla deliveries on a chart
Tesla deliveries on a chart

By the end of 2018, the company aims to produce around 125,000 vehicles per quarter, a figure that still pales in comparison to General Motors’ output of over nine million cars per year.

This expansion has come through large-scale ventures like the Gigafactory, a 5.8-million-square-foot building in the Nevada desert that has cost over $1 billion to build. The company is already planning for a total of five Gigafactories around the world. On the product side, Tesla is planning to launch a Model 3 entry-level vehicle, a new Model Y sports utility vehicle, and a next-generation Roadster.

All of this requires investment. In its most recent quarter, Tesla spent $533 million on the Model 3 and Gigafactory. The company’s latest annual financial report showed the company has around $7.5 billion of long-term debt, and $3.3 billion of that is due for repayments before the end of 2019. In 2016, revenue reached $7 billion, but the company made a loss of $667 million.

Tesla may not be undergoing the same transitions as its legacy partners, but it’s pursuing an aggressive expansion strategy that needs money from somewhere. Unfortunately, it looks like that cost could come back to the consumer.

Photos via Inverse, Getty Images / Justin Sullivan