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

[Canuck]

Tesla Motors is not in this to make someone's 'second car'.

I agree but we need to face reality. There are more 2+ car households than single ones (57% percent of U.S. households have two cars or more). The vast majority of people are not going to replace all of their ICE vehicles with electric. That just won't happen despite Tesla's good intentions. And when people go on road trips, not everyone is like the folks here. I'd say the majority of people would rather buy gas than plan charging routes. So, in my opinion, supercharging should be an option on the Model 3 since not everyone will want it or need it.

 

[mwulff]

I agree but we need to face reality. There are more 2+ car households than single ones (57% percent of U.S. households have two cars or more). The vast majority of people are not going to replace all of their ICE vehicles with electric. That just won't happen despite Tesla's good intentions. And when people go on road trips, not everyone is like the folks here. I'd say the majority of people would rather buy gas than plan charging routes. So, in my opinion, supercharging should be an option on the Model 3 since not everyone will want it or need it.

Why wouldn't they replace both cars? If this forum is anything to go by then people who experience an EV everyday very rapidly start to think that ICE's are clumsy, hard to drive and uncomfortable.

I would expect consumers to buy a second EV as soon as they realize the first one is brilliant.

If we had two cars I would love to have a Model 3 and maybe an e-Golf or a Leaf as the second car.

One of Tesla's biggest value propositions really is the supercharger network. They will roll it into the price of the car if they can. There is a fantastic argument at sales-time when the tesla-employees can say "ohh and feel free to take a trip to California with the car. It's on us ".

 

[MartinAustin]

The $180/KWh I am quoting is not Tesla's current cost, it's a projection of how much the Gen 3 battery pack would cost.

That said, the projection was made prior to Gigafactory, and perhaps the savings are bigger now.

And this is all complete speculation located in yet-one-more-regurgitative-model-3-speculation-thread of which there have been many and there will be many more before we are finished.

 

[Red Sage]

Canuck: The people who would prefer not to have Supercharger access included, and would request (or demand) it be removed in favor of a refund or reduction in price, can go buy a Volkswagen e-Golf, have a Coke and a smile, and shut the [FLOCK] up.

Just like the people who don't want to roll the standard, included, 18" alloy wheels, and ask why they can't just get old-school 14" steel rims with hubcaps like they had on their 1994 Chevrolet Cavalier in order to 'save money'.

Saying you don't need Supercharger access because you would never use it also ignores the fact that the next owner of the car will want to do so... Get this: in order to 'save money'.

Most people who get a Tesla Motors product find they drive more often over distances they previously would have taken a flight. The people who put their foot down in resentment over this issue will have their order canceled, deposit returned, and account closed the instant they utter the magic words, "...I'll never buy from you again!" OK, cool. Tesla will take their word on it, call their bluff, kick them to the curb, and sell the car to someone more appreciative.

I sure would.

 

[Model 3]

The $180/KWh I am quoting is not Tesla's current cost, it's a projection of how much the Gen 3 battery pack would cost.

That said, the projection was made prior to Gigafactory, and perhaps the savings are bigger now.

And this is all complete speculation located in yet-one-more-regurgitative-model-3-speculation-thread of which there have been many and there will be many more before we are finished.

I've read some compelling articles that referred to the price was at $180/KWh for cells Tesla buys from Panasonic as of the last time they renegotiated the contract they have. Now I can not find the articles that I read, but here you can at least see that others also refers to this prize as a fact.

If they can do what they want to, to reduce the price of the battery cells with 50% when the GF is in full action by 2020, then the cell-price will get well below that magical $100/KWh line...

 

[Canuck]

Canuck: The people who would prefer not to have Supercharger access included, and would request (or demand) it be removed in favor of a refund or reduction in price, can go buy a Volkswagen e-Golf, have a Coke and a smile, and shut the [FLOCK] up...

Saying you don't need Supercharger access because you would never use it also ignores the fact that the next owner of the car will want to do so... Get this: in order to 'save money'.

That's quite rude to the owners of Model S's here who bought them without supercharging -- and that was only a small price to pay compared to the overall price of a Model S. The price savings, percentage wise, would be much greater with a Model 3. Those people didn't want the e-Golf and there's no need to be rude to them about their decision. They wanted a model S but don't need or want supercharging and would rather have saved money. I bet a lot of people who own a model S have never been to a supercharger and never will be.

With regard to the next owner, it will be just like the Model S's we see for sale here without supercharging. They just pay Tesla to have it enabled so the ad would read "add $* to enable supercharging." In fact, it can be considered a benefit since people buying used who don't want it can save even more.

As for buying two electric vehicles to replace ICE vehicles in 2+ car households, that just won't happen anytime soon. The majority of people here (on an electric vehicle forum) don't own two electric vehicles (like I do) and the vast majority also have an ICE vehicle at home (as I do - one hybrid, one ICE, two electrics). So saying that people will want to go all electric makes for a nice talking point, and it will happen, but not for a very long time for the masses, since it's not even happening for the enthusiasts.

In any event, only time will tell what Tesla will do with the Model 3 and optional or standard supercharging. It will be interesting to find out.

 

[gregincal]

Saying you don't need Supercharger access because you would never use it also ignores the fact that the next owner of the car will want to do so... Get this: in order to 'save money'.

Supercharging can be enabled at any time. So somebody can buy the car for a cheaper price and then pay the supercharger fee when they realize how nice it is to drive. I can see it either way. I wouldn't be surprised if they include supercharger access with every car, but I think it's fine if they don't in order to meet the 35K price.

 

[mwulff]

As for buying two electric vehicles to replace ICE vehicles in 2+ car households, that just won't happen anytime soon. The majority of people here (on an electric vehicle forum) don't own two electric vehicles (like I do) and the vast majority also have an ICE vehicle at home (as I do - one hybrid, one ICE, two electrics). So saying that people will want to go all electric makes for a nice talking point, and it will happen, but not for a very long time for the masses, since it's not even happening for the enthusiasts.

You keep stating this as a fact, but this is pure speculation on your part about what consumers might do in the future. I looked around this forum and it's filled with posts like: "should've sold my ice the moment I got the S" and so on.

If there was more choice in EV types I am pretty sure that many would gladly go EV only. In my country people aged <35 are truly starting to want ev's. The Tesla Model S is seen by many as a far more desirable vehicle than a Porsche or a Ferrari. If I had a nickel everytime somebody says: "I saw a Tesla the other day and ohhh my god....".

All I have is speculation but in this country we are approaching a tipping point where ICE cars are less desirable than EV's. This is all based on observing and talking cars with people younger than me. EV's are cool and environmentally friendly. ICE cars are dinosaurs that only old people buy and drive. Most don't even desire a car because of the headaches it brings.

I have no scientific facts to back up my claim, all I have are observations. But get the EV's cheap enough and everybody here will want one.

Give it another 8-12 years and you won't be able to resell a used ICE car in this country

 

[dsm363]

You keep stating this as a fact, but this is pure speculation on your part about what consumers might do in the future. I looked around this forum and it's filled with posts like: "should've sold my ice the moment I got the S" and so on.

If there was more choice in EV types I am pretty sure that many would gladly go EV only. In my country people aged <35 are truly starting to want ev's. The Tesla Model S is seen by many as a far more desirable vehicle than a Porsche or a Ferrari. If I had a nickel everytime somebody says: "I saw a Tesla the other day and ohhh my god....".

All I have is speculation but in this country we are approaching a tipping point where ICE cars are less desirable than EV's. This is all based on observing and talking cars with people younger than me. EV's are cool and environmentally friendly. ICE cars are dinosaurs that only old people buy and drive. Most don't even desire a car because of the headaches it brings.

I have no scientific facts to back up my claim, all I have are observations. But get the EV's cheap enough and everybody here will want one.

Give it another 8-12 years and you won't be able to resell a used ICE car in this country

We are a long way off from even a quarter of all homes in America owning one EV, let alone a two car household going fully electric. I have only been kept from taking trips I wanted a handful of times in the last 4 years by driving only electric but for some people, one trip they couldn't take their personal car on would be enough for them to turn around and sell it.

 

[mwulff]

We are a long way off from even a quarter of all homes in America owning one EV, let alone a two car household going fully electric. I have only been kept from taking trips I wanted a handful of times in the last 4 years by driving only electric but for some people, one trip they couldn't take their personal car on would be enough for them to turn around and sell it.

Completely true. Our distances here are way shorter so I think we will reach the ev-tipping point a lot sooner. But maybe we are drifting off topic here.

Back to cost savings: skip HID and go for classic bulbs. Keep the LED though. That would help across 100.000 cars

 

[SmartElectric]

I bet a lot of people who own a model S have never been to a supercharger and never will be

I'll take that bet!! The primary reason I would buy a Tesla is for longer range trips than I can take in my current EV (Smart ED).

There are hundreds of thousands of us short range EV owners, and we will be buying longer range EV's as our second vehicles in a few years time. If I don't get into a Model S prior to the Model 3, I will expect supercharging to be a standard feature of the car, but even if not, I will be purchasing that option if necessary, as will the vast majority of people coming out of existing short range EV's.

A worldwide supercharging network is arguably the greatest achievement made by Tesla. Brilliant!

- - - Updated - - -

We are a long way off from even a quarter of all homes in America owning one EV, let alone a two car household going fully electric.

Sure, today, but by the time Tesla Model 3 is available for sale, there will be many hundreds of thousands of short range EV's on the roads, and those drivers (like me) will be looking to go fully electric. Right now, I have a gas SUV in my driveway that does all of our family trips, most of which are >120km and the majority of our long trips are in winter when EV range is halved here in Canada.

Volt is too small for our family, and no other EV has long enough range. Larger PHEV's like Ford Fusion are poorly implemented for winter driving due to running the gas motor to warm the cabin. There is just NO other option outside of Tesla Model S right now that I would even consider to replace my Mercedes SUV.

Our family average gas mileage is 5L/100km totalled for both vehicles, which would be like two Prius, and yet I have a 300HP SUV and a fast and fun Smart ED, so much preferable to running two hybrids...

 

[Canuck]

"We suspect that access to the Supercharger network will be an option for Gen 3 (so, some will undoubtedly say it isn’t free then)."

From:

Elon Musk Confirms Free Supercharging for Tesla Gen 3 (Model E) | Inside EVs

 

[aronth5]

Canuck: The people who would prefer not to have Supercharger access included, and would request (or demand) it be removed in favor of a refund or reduction in price, can go buy a Volkswagen e-Golf, have a Coke and a smile, and shut the [FLOCK] up.

Just like the people who don't want to roll the standard, included, 18" alloy wheels, and ask why they can't just get old-school 14" steel rims with hubcaps like they had on their 1994 Chevrolet Cavalier in order to 'save money'.

Saying you don't need Supercharger access because you would never use it also ignores the fact that the next owner of the car will want to do so... Get this: in order to 'save money'.

Most people who get a Tesla Motors product find they drive more often over distances they previously would have taken a flight. The people who put their foot down in resentment over this issue will have their order canceled, deposit returned, and account closed the instant they utter the magic words, "...I'll never buy from you again!" OK, cool. Tesla will take their word on it, call their bluff, kick them to the curb, and sell the car to someone more appreciative.

I sure would.

Red Sage, so lets assume for a minute that Tesla can get the price down to $37k but not $35k unless they make supercharging optional. What would you do?

 

[stopcrazypp]

"We suspect that access to the Supercharger network will be an option for Gen 3 (so, some will undoubtedly say it isn’t free then)."

From:
Elon Musk Confirms Free Supercharging for Tesla Gen 3 (Model E) | Inside EVs

To be clear, that's speculation from the author, not what Elon said himself. Personally, I would be fine with both situations. A $2000 supercharger option would not stop me from getting it.

However, the caveat is whether DC charging (like CHAdeMO/CCS) is included is a different story. By the time the Model 3 is out, a lot of the economy EVs will have this included standard (many already do). So it'll be less competitive if they don't include some type of DC charging as standard.

 

[motobroker]

Hi! I'm new here. Interesting post...I'm not sure that it is achievable

 

[Red Sage]

My firm position is that sales of the Generation II vehicles will support Supercharger access for many years to come.

 

[sandpiper]

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

Exactly. You have to recall that, except for the battery and electric motors, there is nothing that should make a Tesla more expensive than any other car. Excepting the cost of the battery, it should by rights be cheaper. The cost and complexity of a the ICE and associated systems is completely eliminated. If they make the car out of steel instead of aluminum and reduce the finish levels to what would be expected in another 35k car then it's quite attainable - assuming that they can hit the volumes.

As to the battery: That too is a manufacturing issue. The cost of raw materials in a Tesla battery is not a huge driver. The cost is in the manufacturing process. Volume, combined with more automation and a lot of learnings that have taken place on the Model S/X will make an enormous difference in those costs.

And, I doubt we'll see many 35K cars. I expect more of the 45 - 50K cars. It's tough but all doable.

 

[Red Sage]

I believe you'll end up seeing more of the base Model ≡ than you expect. They are bound to be very popular with taxi and livery services, as well as fleet sales to companies and municipalities, not to mention becoming a staple for leasing agencies and rental firms. They will be... Everywhere.

 

[1208]

I figured it out again. This is probably the best and most cost reductive idea yet and we finally understand the real reason why its called the model 3.

The wheels cost a lot. So if we remove 1 we save a lot of money.

Three wheeled ev. Hence the model 3. Genius.

 

[tdelta1000]

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.

I agree