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How is Tesla going to make the Model 3 for $35,000?

Discussion in 'Model 3' started by thegruf, May 12, 2015.

  1. thegruf

    thegruf Member

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    The Model S 70D is $75,000 at today's pricing.

    What $40K value gets cut off to get the price down to $35K?

    Smaller body shell (2 doors would save some more)
    Single smaller motor
    Smaller wheels/tires
    Battery - cheaper in a couple of years but still got to be good for 200+ miles
    Cheaper HMI

    Does that really add up to $40K value?

    What's your math on this?
     
  2. gregincal

    gregincal Active Member

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    Smaller margins. Increased volume covers more fixed costs.
     
  3. SabrToothSqrl

    SabrToothSqrl Active Member

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    I'd say niceties like power locks/windows/etc, but that's not the real cost of the car. it's all in that battery pack. I'd cut the HP from the 360 that mine is down to say 300 or 260. That could save some $

    Smaller battery - will save $
    Cloth Seats vs. leather - save $
    Cheaper rims - save $

    Number of man hours to assemble - reduce that and you'd save a ton. Make the car easier to snap together.
    Offer more things as optional will get price down... power windows/locks.

    I assume you could forget about the power retracting handles on the 3, but that may be a signature Tesla move and they may want to keep them.

    You could consider smaller / cheaper screens, but why? Making the driver and center stack identical in all their cars makes manufacturing the parts and the software easier.
    If you only have to make one of a thing, it's much simpler than GM with 20 engines across 4 car type planning.
     
  4. Kevin Harney

    Kevin Harney Active Member

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    And you are forgetting economies of scale. Overall cheaper parts costs because of increased volume.
     
  5. Model 3

    Model 3 Active Member

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    Yes. But think it will still be 4(5) doors.

    Singel maybe, but the 70D already has the smaller motor that Model 3 will have.

    Yes.

    Yes. Price for battery cells will be at least 30% down with the GF, and possibly 50% when it is in full production in 2020.

    Quite possibly.

    +

    - Volume, volume, volume.
    - Lower margin on each car, replaced by: "Volume, volume, volume."
    - Lower prices on parts - from: "Volume, volume, volume."
    - Better, cheaper production lines - from: "Volume, volume, volume."
    - Lower fail-rate and less warranty repairs - from: Experience with the TMS/X.
    - Some cheaper materials like not using aluminum all around, maybe not using boron-steel?
     
  6. Kevin Harney

    Kevin Harney Active Member

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    Yes. Economies of Scale on parts and batteries will be the greatest factors.
     
  7. gregincal

    gregincal Active Member

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    Besides which, I can't really imagine cranking down the windows on the Model 3 like a '90s Corolla.
     
  8. Twiglett

    Twiglett Single pedal driver

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    indeed - just because the base model needs to hit 35K, it doesn't mean that all the expensive stuff can't either be optioned in or that different trim levels can't be offered.
    The Model S is a very high margin car - but it is funding the expansion of the company.
     
  9. gavine

    gavine Petrol Head turned EV Enthusiast

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    Not all aluminum.
    No Brembo brakes.
    Not dual-motor AWD.
    Supercharging optional.

    Also, what's the cost difference between a 7-series and 3-series BMW? Quite substantial and similar comparison levels.
     
  10. mtndrew1

    mtndrew1 Member

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    Long time lurker, first time poster. I just drive a lowly Kia Soul EV.

    Annyyyyway I've been chewing over the Model 3 numbers for a while and I thought it was borderline implausible that TM would be able to deliver a $35,000 ~55 kWh car and make any money on it right up until the Q1 call.

    Elon guided that once Gigafactory cells are in production that they anticipate a 20% gross margin on stationary storage. This means that since they're selling stationary for $250/kWh that TM has a BOM price of $200/kWh or lower effective Q2 2016. I presume it will drop slightly by the time Q4 2017 rolls around.

    This implies a cost of ~$11,000 for the pack in the Model 3. Starting at $35,000 MSRP and backing out TM's 25% gross margin that leaves us $26,250 to play with. Subtract the battery pack and that leaves $15,250. The most expensive parts of a car outside of powertrain are seats, glass, and crash pyrotechnics. Even so, I can say with relative confidence that it costs much less than $15,250 in parts and labor to assemble a modern automobile. Furthermore I expect Supercharging to be a $2,000 option which the vast majority of 3s will be equipped with, effectively bumping up the MSRP nearly 6%.

    Stamp the 3 out of steel, equip it with less flashy rims, brightwork, and lighting, make everything optional (a la BMW), and there should be no issue in TM sourcing materials and assembling a compact/midsize sedan for $15,250 with a 25% gross margin.

    As far as timeline and potential delays, I think Elon's got this sorted by now. Besides the chassis stampings and crash testing, there's not a lot left to do. Seats, pyrotechnics, glass, steering column, and lighting will all be from suppliers. The OBC will be the same as the S/X/Supercharger, the mobile connector is done, the cooling systems will be largely carryover, vehicle software is likely to be similar, etc. If it's front drive, the Ds/B-Classes/RAVs have taken care of front drive engineering and packaging work, if it's rear drive then it's drop in.

    As an armchair quarterback I think the Model 3 will be on time and at or near the promised MSRP.
     
  11. thegruf

    thegruf Member

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    ^ good analysis and with you all the way until the last line :)
     
  12. igotzzoom

    igotzzoom Member

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    There's absolutely zero chance the Model 3 will come to market with crank windows. Power windows have become so commoditized that it's probably cheaper for OEs to make all of some models with power windows than to have a relatively low volume with crank windows. There are still some (limited) exceptions to the rule, like fleet trucks, but the vast, vast majority of new cars have PW standard.

    In terms of the other points brought up on this thread, yes, a lot of the technology is already amortized among the Model S and Model X. The 3 may not have the flush door handles (at least not standard), which isn't a deal-breaker for me. It will probably have some sort of cloth or "leatherette" standard. I think the base model will be reasonably-equipped, but not lavish. Equipment level will probably be on par with a mid-trim Accord or Camry. (Not that I'm comparing it to a CamCord).
     
  13. mtndrew1

    mtndrew1 Member

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    Having been privy in the past to materials and assembly costs for a major automaker, there's nowhere near $20,000 of "stuff" in a 3 series, powertrain or not. Amortized engineering and capex, perhaps, but not car parts.

    I figure the extra-cost features on the Model 3 that are standard on the S will be:

    Auto-dimming rear-view and outside mirros
    Power folding mirrors
    Mechanized door handles
    Dual-zone climate control
    Xenon headlamps
    Power memory seats
    Power steering column adjustments
    Rain-sensing wipers
    GPS
    Auto up-down non-driver windows
    Homelink
    Parking sensors
    Autopilot hardware
     
  14. stevej119

    stevej119 Member

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    #14 stevej119, May 12, 2015
    Last edited: May 12, 2015
    Sure, they'll be incorporating a lot which they've learned from building the S, but let's not lose sight of the fact that this is an entirely new car intended to be sold at the rate of 500,000 per year. The base model will not go 0-60 in 5 seconds and there's no reason why that would be necessary. This is a car for the masses and we shouldn't be disappointed that "it lacks this or that which is the trademark of Tesla." We need this car to hit a price point which makes it affordable to those who desire to own it. 17" touchscreen, self-extending/retracting door handles, 300 hp motor... those are not necessities in my opinion.
     
  15. Dutchie

    Dutchie Member

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    I remember Elon saying that the 3 would be made of steel in stead of aluminium
     
  16. thegruf

    thegruf Member

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    most probably part/part as they will have to watch the weight, otherwise bigger battery required for the range

    - - - Updated - - -

    one thing with the options is to keep them as 2 or 3 add-on packs (eg Sport, Tech, Lux) which will preserve their value better on the used market which will be even more important in a more competitive sector as options alone are worth next to nothing at trade in
     
  17. joefee

    joefee Over 2 Million TMC page views

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    When I sent in my deposit for the Model S (before the factory was on line and with no betacar) the plan was for "starting at 55K" after rebates....I'm sure the Model 3 you'll want to order will be 2x 35 or 70K. Still the base model will be more than adequate and well worth the money (it could be a loss leader).
     
  18. Canuck

    Canuck Active Member

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    Nissan makes the Leaf for under $30k at current battery prices. So add another $5k of batteries to the Leaf's price, at the gigafactory's reduced price, and it's done. Probably easier said than done, though.
     
  19. gregincal

    gregincal Active Member

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    I expect a car far superior to the Leaf, however, not just with more range.
     
  20. Canuck

    Canuck Active Member

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    In what way other than appearance? The Leaf does 0 to 60 in under 8 seconds and it drives and handles really nice with top safety ratings. It also comfortably fits my family of 5, with good cargo space and so far has been very dependable (aside from the 12volt battery problem). It has a good backup camera, bluetooth (better than Teslas), keyless ignition, etc. My only gripes are the range and appearance but the appearance has grown on me.
     

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