Is a $35,000 Tesla Model 3 Envisioned by Musk Profitable? UBS Says No

[Nuclear Fusion]

Is a $35,000 Tesla Model 3 Envisioned by Musk Profitable? UBS Says No

Tesla Inc. is making an operating profit of more than $3,000 on each sale of the current low-price version of its Model 3 sedan, but would likely lose nearly twice that amount if it sold the vehicle at its long-promised $35,000 price tag, according to a new estimate from UBS Securities LLC.

Tesla Model 3 is 'military-grade tech years ahead of peers' but still expected to lose money

Tesla's Model 3 sedan is blowing engineers away, but it might be a big headache for folks in finance.

Analysts at UBS pulled apart three different electric cars to compare their technology and production costs: a new Tesla Model 3, a 2014 BMW i3 and a 2017 Chevy Bolt.

The engineers hired by UBS to examine a $49,000 2018 Model 3 were "crazy" about the powertrain, "highlighting next-gen, military-grade tech that's years ahead of peers," said UBS analyst Colin Langan in a note dated Wednesday. But the costs were higher than expected, and the cars would lose about $6,000 each at Tesla's original plan to sell an entry model at $35,000, he said.

 

[kengchang]

Sandy Munro says LR 30+% SR 16%, FUDDDDDDDDDDD

 

[Electroman]

Only one who knows is Tesla.

The rest all - including UBS and Munro are just winging their way for more clicks and cheap publicity.

 

[rdlink]

Is this the same UBS who tried to do this same analysis on the Model 3 by tearing apart a Leaf???

 

[juanmedina]

They don't even have the 35k with the ligther and cheaper new battery pack. It is just speculation.

 

[jmp3000]

This also UBS report also ignores the fact that 50-75% of SR purchasers will likely get either autopilot or FSD. This should easily push it into profitability for the majority of sales.

 

[smak]

UBS says

Cost of 49k model3 ~41k
Cost of 35k model3~ 41k

Something is wrong in that picture.

 

[Stirfelt]

My Mamma taught me .... "If you can't say something nice .... don't say anything at all."

I've wearied of all the negative comments about everything and everyone in our society. There are people and things (Tesla specifically) that the media is going to fault for everything thing ... and mostly by writers that know little about their subject. Investigative, thoughtful journalism cease to exist. Inflammatory (the more the better), negative comments sell, and gets headlines.

 

[Rockster]

Yes, Tesla is betting the farm on a car that can’t be profitably built. It’s probably because they know less about the cost of making their own cars than the experts at UBS do. And the folks at Munro are clearly wrong, too. Now that I think about it, I bet that Tesla completely overlooked the fact that they need to sell cars at a profit. It probably hasn’t even occurred to them, that profit thing.

Now that UBS has cleared things up for them, maybe Tesla can finally get their act together.

 

[S'toon]

Base model means no pricey PUP upgrades which the current LR model has. Smaller battery. I note also they said the battery costs $178/KWh, which hasn't been true in years.

 

[TurnFast]

What a goof by Tesla not realizing they need to make money on cars they sell. Probably some face palming going on at Tesla HQ right now.
Glad that's all cleared up for them now.

 

[Nuclear Fusion]

This UBS report also ignores the fact that 50-75% of SR purchasers will likely get either autopilot or FSD. This should easily push it into profitability for the majority of sales.

Yep, that’s pure profit

 

[smak]

Is there a breakdown of how many people buy EAP and FSD?

 

[Pkmmte]

$178/kWh?! It's like they completely ignore the fact that the Gigafactory exists!

 

[jelloslug]

Is this the same UBS that has a 30% hit rate on their TSLA predictions and a -20% return?

 

[Rockster]

Yes, Tesla is betting the farm on a car that can’t be profitably built. It’s probably because they know less about the cost of making their own cars than the experts at UBS do. And the folks at Munro are clearly wrong, too. Now that I think about it, I bet that Tesla completely overlooked the fact that they need to sell cars at a profit. It probably hasn’t even occurred to them, that profit thing.

Now that UBS has cleared things up for them, maybe Tesla can finally get their act together.

It seems that my sarcasm wasn’t dripping enough...

 

[Stirfelt]

Base model means no pricey PUP upgrades which the current LR model has. Smaller battery. I note also they said the battery costs $178/KWh, which hasn't been true in years.

I do not understand this statement. True, the SR does not come with PUP, but neither does the LR. (Am I correct?)

Are you implying that PUP is not available of the SR?

 

[MXWing]

This also UBS report also ignores the fact that 50-75% of SR purchasers will likely get either autopilot or FSD. This should easily push it into profitability for the majority of sales.

The problem with a 35K Model 3 is it’s likely to remain a 35K Model 3 with the exception of paint.

Can anyone find a P100D owner who didn’t take software? Probably very rare if any.

The higher the base the higher the uptake on options.

It’s all common sense and expected.

I don’t see many people raising the cost of the car by over 20% to add software.

 

[xyeahtony]

I do not understand this statement. True, the SR does not come with PUP, but neither does the LR. (Am I correct?)

Are you implying that PUP is not available of the SR?

Right now you have to order the PUP or you dont get a Model 3. (i mean the premium interior package*)

 

[Stirfelt]

Thanks tpham07 - My interest right now (it could change in time) is a SR with PUP, 18 inch wheels, and a color other than black. That pretty much completes my interest at this time.
I have no need for AWD, and little interest in a performance package. (I assume that requires AWD).

I read with interest EM's statement about battery modules, not that I understand what he said, but I am hoping the change will render a little more range than 220 mile.

I suspect (hope) that once the federal rebate expires, there will be a modest reduction in the $9K LR cost. I acknowledge it is a good price especially with the fed credit, but I am building a house, and money it tight, even if it is a good bargain.