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35k SB Model 3, UBS Profit Study

Discussion in 'Tesla, Inc.' started by ShearModXY, Aug 23, 2018.

  1. ShearModXY

    ShearModXY Member

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    $35K Tesla Model 3 envisioned by Musk not profitable, UBS says

    OK, I'd prefer not to be brow beaten over this article or question but I'm going to post anyway.

    So, Elon says the high-dollar cars need to be produced first or Tesla would die. I understand that concept. I also understand that even with these high-dollar cars, the Model 3 is the best selling car in its class and I believe that position will only continue to strengthen as ramping continues.

    Sandy Munro's firm tears down the Model 3 (yes, a ER, PUP car) and concludes that there is 30% profit margin built into the Model 3.

    Then, recently UBS concludes that Tesla won't be able to produce the Standard Battery (SB) version of the Model 3 and become or stay profitable...

    Now, I understand basic economics... if it costs more to produce a widget than you are selling it for, losses occur on each piece and the company cannot be profitable... but what about the 30% margin from Monro? I know, the SB Model 3 is less money BUT don't we have to account for VOLUME?
    Even if they are making less per car in the SB form, they will be still making something on each car, even at a smaller margin... and presumably, many of the folks still waiting on the list (like me) want to take advantage of the 'Master Plan' car and buy our first EV in the form of the SB (maybe with the PUP on the inside) vehicle because that is the price range we can afford.

    So wouldn't/couldn't a smaller profit margin STILL be profitable if the volume of SB cars is high?
    I know some of the folks on the reservation list, even from day one, threw in their deposit knowing they want a SB version of the car...

    So help me out. I believe Tesla will still make the SB version AFTER the high-dollar cars are produced and with the growing volume of SB buyers, they should be fine, despite what the Bears say.

    Educate me...

    Thanks All!
     
  2. Pluto

    Pluto Member

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    Munro says he expects like 8% margin for the base Model 3. He’s also being sued over his Model 3 teardown rn. Sounds like someone really doesn’t want him saying the Model 3 is profitable. And yeah you’re completely right.
     
  3. ShearModXY

    ShearModXY Member

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    Ok, I must have missed the Munro estimate of the 8% return on the base model. That's great to hear. I mean, it would take a Bear to believe Tesla would make a car at the 35k level knowing they can't make a profit on it as some level. And yeah, wouldn't surprise me if the Oil Forces are behind such a law suit.

    I'm just thinking about 8%, if I were getting that return on my savings account, I'd be freaking thrilled. While other Old-Guard car companies might scoff at an 8% margin, I think that's certainly enough to keep things going, *if* the volume accompanies those base cars.
     
  4. achilles992000

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    the side mirrors reduce range by 5%.
    if DOT can change the regulation, that would be a huge savings cost for Tesla.
    Tesla could reduce the battery pack by 5% and get the same range.
     
    • Funny x 1
  5. Pluto

    Pluto Member

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    I apologize, it was actually 18% gross margin. Yeah none of this info was actually said by Munro publicly, the Autoline host mentioned later that he told him. See here for the 18% comment.
     
    • Like x 1
  6. ShearModXY

    ShearModXY Member

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    So all I can say is Holy Cow! Truly. I even thought 8% profit margin was decent but 18! Even if it's not 18 and it's something lower, something in the 10-15% range, I'd say they are going to be fine.
    So basically, all of the *actual* data, although still estimates, show or prove that even in SB form, Tesla will be good with profit margins... and I would still like to say that when they throw in huge volume from high demand for the SB cars, I think Tesla is well on its way to being profitable and will continue to dominate the segment even in basic trim.
    Thanks for the data!
     
  7. Pluto

    Pluto Member

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    #7 Pluto, Aug 23, 2018
    Last edited: Aug 23, 2018
    See this Hyperchange video roasting the UBS analyst, god I hope it goes viral because this is ridiculous.
     
  8. ShearModXY

    ShearModXY Member

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    Will do! I love HyperChange! Thanks for sharing! I know what I'll be listening to on my way to work tomorrow!!!
     

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