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Lux Research says Gigafactory will reduce price of Gen 3 by only $2800.

Discussion in 'Tesla Motors' started by yobigd20, Sep 4, 2014.

  1. yobigd20

    yobigd20 Well-Known Member

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    "We find the Gigafactory will only reduce the Tesla Model 3’s cost by $2,800, not enough to truly influence whether this lower-cost EV will be a success or not."

    well, I don't have access to the report, but I'm very curious as to why they think that the gigafactory will only reduce the cost of Model 3 from $37,800 to $35,000. That just seems silly to me. I would think the savings are going to be much more significant from that. They also seem to just toss out anything substantial from SolarCity. I guess whoever wrote that article doesn't know about the potential usage of it for grid storage. Lux thinks that they'll produce more batteries than they know what to do with them. No mention either of the fact that the gigafactory is being designed to be able to be retooled/upgraded for for new battery types and chemistry's as they are invented. Lux just seems to be super short sighted.

    Report: Tesla Gigafactory a Well-Played Overreach - IEEE Spectrum
    The Tesla-Panasonic Battery Gigafactory: Analysis of Li-ion Cost Trends, EV Price Reduction, and Capacity Utilization :: Lux Research

    Lux also think's Tesla will only be producing 240,000 cars a year by 2020. again, super-short sighted. they factory was just retooled for the Model X and the production line will soon be able to (if not already) make 120k cars/year. we've got 5-6 more years till 2020, so to think that the growth is only going to go from 120k to 240k heavily discounts the demand for the Model 3. Clearly the authors/Lux have never driven a Tesla before. If they had, they would've realized that the demand is going to be through the roof and Tesla won't be able to make enough and they'll have to expand even further. other car manufacturers should be bracing themselves right now for bankruptcy once the Model 3 is out or at a minimum seriously investing in making some type of quality EV since nobody will want to buy gasoline powered cars anymore as it just doesn't make any sense. why pay $40k for a BMW that is less technically savvy and still have to pay $80 to fill up when you could buy a Model 3 for $35k , get all the cool features like supercharging while only paying just a fraction, if not completely free, of the cost for "filling er up". Lux needs to open their eyes.
     
  2. artsci

    artsci Sponsor

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    It astounds me how consistently financial analysts have made fools of themselves underestimating Tesla. This likely will be another case.
     
  3. RobStark

    RobStark Active Member

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    I wounder what Lux Research would have said about Tesla in 2011 going from 800 roadsters per year to selling 800 sedans per week with an Average Selling Price of $106k?
     
  4. mochouinard

    mochouinard Member

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    The problem is lot of research firm don't have the real figure of the cost of make a battery. Also, Elon doesn't say what those battery will be like neither except there lithium in them and will be cheaper to produce. Not lot to go on to say he either wrong or right at this point. Panasonic seem to really believe in it too.
     
  5. Chickenlittle

    Chickenlittle Active Member

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    Not a problem, just make them up to suit your purpose
     
  6. chickensevil

    chickensevil Active Member

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    I posted this information elsewhere so I will just restate it here... Their math is flawed.

     
  7. ToddRLockwood

    ToddRLockwood Active Member

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    #7 ToddRLockwood, Sep 8, 2014
    Last edited: Sep 8, 2014
    I am not convinced that Tesla has shown all of it cards yet with regard to the battery technology it will employ in the Model 3. Elon has said that Tesla will be offering a 500 mile battery for the Model S in the not-too-distant future. The only way this could happen is with a quantum leap in energy density. There have been hints about lithium-graphene battery development. If such a leap is in the works, it makes sense that Tesla would not want to show its hand until just before the Model 3 is released and the gigafactory is in full production mode.
     
  8. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    And I consider your idea of a 45kWh battery extremely flawed. Somebody needs to ask Elon Musk or JB Straubel what minimum capacity they think they will need. Elon Musk said "it" would be 20% smaller, some journablogger ran with 48kWh and since then nobody has actually bothered to ask what battery size they're thinking the base Model 3 will need and why, even though it's extremely important to the cost/utility balance and the required density of the Supercharger network.
     
  9. chickensevil

    chickensevil Active Member

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    I accept that the 45/48 whatever is speculation. Which is why in terms of them being flawed the two key points is that 196 is NOT 30% of 274 and 4,932 (which would be a 60kW for a 60kW) would be MORE than the 2,800 crap they have thrown out. The extra at the end is just suggesting that it will be even more than a ~5k price reduction given that with a smaller car you will not need as large of a battery to propel it forward to get the same ~200 mile range. That is just simple physics...

    This doesn't even begin to attack their 275 number (which is also likely very flawed) nor does it attacked their claims of low demand... because it doesn't need to. If you are going to make numbers up, you should at least make sure that they all work together to stick to your claim... Otherwise, you are just making stuff up... which is what appears to be happening here.

    "Yeah, uhhhh based on my estimates, I think that Tesla is getting 3000$ per kW and uhhhh the factory will reduce that by 50% to 1000$, so it is clear to me, that they will not meet their 5billion demand requirement..." That might as well be what they wrote... because it makes just as much sense.
     
  10. Yuri_G

    Yuri_G Member

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    Do you have a link for that quote? I've only heard him say that Tesla could create a 500 mile battery, but won't because it would be impractical.
     
  11. ElSupreme

    ElSupreme Model S 03182

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    I think an almost $3000 savings on the car is quite significant. If you told GM they could save $3k on every drive train, if they built a gigafactory there would be one next year! And if they are talking production cost you can add Tesla's profit number as well.

    We are talking almost 10% savings on ever car. This is quite significant and no trivial matter. Not to mention the gigafactory really solves the supply problems Tesla is already dealing with. This is as important if not more important than the cost savings.
     
  12. chickensevil

    chickensevil Active Member

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    Yes, but I got the impression that they were suggesting that they wouldn't be able to get enough savings to make a 35k car viable. As in, they would be selling the cars at a loss or would have to raise the prices. So 3,000 isn't nearly enough to make a 70k car 35k.
     
  13. ElSupreme

    ElSupreme Model S 03182

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    Well that is the question.

    Other manufacturers seem to make ~$15k vehicles. So if Tesla can make an EV drivetrain/battery combination that is sub $20k they should be able to hit $35k, while keeping the ICE/transmission costs as profit. Seems easily doable. Now whether or not Tesla can/will do it has yet to be seen. But I don't see why they are not capable of doing it.
     
  14. ToddRLockwood

    ToddRLockwood Active Member

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    Sorry, I don't. I recall reading it somewhere in the past month. There is also a plan to alter the form factor of the existing lithium-ion cells, making them slightly larger in diameter and thereby increasing their energy density and reducing the overall cost of the pack. Also, JB has said that the Model 3 battery will have a completely new layout, a simpler design that can be built more quickly.

    Still, I can't help but wonder whether there is something more dramatic in the works, a sea change that would more than justify a $5B battery factory. Remember, Elon did say that there are things going on at Tesla that we haven't been told about yet. What that is is pure speculation, of course.
     
  15. RobStark

    RobStark Active Member

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    Tesla is targeting BMW 3 Series.

    A BMW 3 Series glider(car minus powertrain) cost BMW $22k.

    They sell ~500k 3 Series sedans and coupes per year. Plus another ~170k 3 Series derived x3 CUVs.
     
  16. Yuri_G

    Yuri_G Member

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    Here's a quote I found. He doesn't specify the battery will be made any time soon.



    http://www.autoexpress.co.uk/tesla/87943/elon-musk-tesla-boss-on-evs-with-500-mile-range-and-colonies-on-mars#ixzz3Ckfyqzf3
     
  17. Red Sage

    Red Sage The Cybernetic Samurai

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    I suspect that the Tesla Model ≡ will probably have a base price of $34,900 MSRP.

    The automotive industry typically claims something in the neighborhood of 6% margin on average, compared to what they sell to 'independent franchised dealerships' at invoice.

    Since Tesla Motors doesn't have the middlemen to deal with, they could achieve that 6% margin on a $34,900 MSRP on a car that cost them as much as $32,806 to build.

    I think that Elon Musk warned that margins could not be counted on to be as high as 25% as they are with Model S. He downplayed it to 10%, 12%, at most 15% or so... Which corresponds to a $29,665 build cost at 15% margin with Model ≡ at $34,900 MSRP.

    I believe that is a smokescreen, and that Tesla will still be able to achieve 25% margin from the very outset on Model ≡. That would mean that their build cost would be around $26,175 for the base car offered at $34,900 MSRP.

    Let's look at it another way... Dealerships claim they can barely manage 5% profit at MSRP 'on average'. Let's assume for once (yeah, right) that they aren't lying. Let's take a look at the numbers, relative to what the margin to the manufacturer might be...

    Vehicle
    (Factor vs MSRP)
    MSRP
    (1.0000)
    Invoice
    (0.9500)
    6%
    (0.8930)
    10%
    (0.8550)
    15%
    (0.8075)
    25%
    (0.7125)
    Lexus ES 37,550 35,673 33,532 32,105 30,322 26,754
    Toyota Avalon 31,340 29,773 27,987 26,796 25,307 22,330
    Toyota Camry 22,425 21,304 20,026 19,173 18,108 15,978
    Acura TL 36,030 34,229 32,175 30,806 29,094 25,671
    Honda Accord 22,105 21,000 19,740 18,900 17,850 15,750
    AUDI A4 35,500 33,725 31,702 30,353 28,666 25,294
    BMW 3-Series 32,750 31,113 29,246 28,001 26,446 23,334
    Mercedes-Benz CLA-Class 29,900 28,405 26,701 25,565 24,144 21,304
    Buick Lacrosse 33,635 31,953 30,036 28,758 27,160 23,965
    Cadillac ATS 33,065 31,412 29,527 28,271 27,000 23,559
    Chevrolet Malibu 22,465 21,342 20,061 19,208 18,140 16,006
    Lincoln MKZ 34,190 32,481 30,532 29,232 27,608 24,360
    Ford Fusion 22,400 21,280 20,003 19,152 18,088 15,960
    These are the MSRPs of the base versions of each of these vehicles. So that means that the 6% column represents an industry average estimate of the cost to manufacture them. Thus, if the BMW 3-Series 'glider' is ~$22,000 that would mean the drivetrain costs ~$7,250 or so for the base version.

    Now, I fully expect that the base version of the Tesla Model ≡ will have a 60 kWh battery pack and a 302 hp (225kW)/317 lb-ft torque motor. Basically it would be a refined version of the drivetrain that was used in the Tesla Model S 60. Aiming for a $34,900 price point, it may not be possible to get those down to a combined $8,000 price point. But when you consider the other components that are integral to an ICE vehicle, that are not present in an electric car at all, and without a dealership network to satisfy, you can certainly work something out.

    Take note that the base Lexus ES costs significantly more than the base Toyota Camry, even though it is basically a rebadged/restyled Toyota Avalon, which is itself only a slightly stretched wheelbase version of the Camry. I think that if Tesla builds a car that is appointed as well as a Camry LE, while having performance to match or surpass a BMW 335i, it will be a major hit. Some might well scoff at the quality of materials used in the base Model ≡, but it is the driving experience that will get their attention on a test drive. But if Tesla can somehow surpass expectations by having the interior cabin space and accoutrements of the Toyota Avalon XLE, while still costing less than the Lexus ES those Naysayers would be toned down considerably.
     
  18. dsm363

    dsm363 Roadster + Sig Model S

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    You mean the Model 3, right?
     
  19. chickensevil

    chickensevil Active Member

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    The problem with that is you don't need it to be 25% margin on the base price to get 25% GM on the model. Options... you forget that options are the big winner for the Model S. If everyone bought even just a base model 85, it would tank their GM.

    This is why everyone is thinking the ASP on the Model 3 will likely be closer to 50k, because 25% of 50k is much easier to hit when you charge something like 1k for "premium lighting" which probably costs something like 25$ and probably a few minutes to install at the factory. Or the Tech Package costing 3750, when LED's are pretty cheap, and the rest is just software that likely exists in all the cars it is just disabled. The only piece that might cost them anything significant in that cost is the folding mirrors. I am going to say that at most the real cost of the Tech Package is like 500$ (including labor to install) and how many people don't get the tech package? Not many...
     
  20. Red Sage

    Red Sage The Cybernetic Samurai

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    No... I didn't 'forget'... I was pointing out that even with a 25% margin on $34,900 that would still be enough cash for Tesla to manufacture a similarly priced vehicle to what is offered from other manufacturers, assuming that economies of scale work in their favor for battery packs and motors. On the other hand, even if the expense of using a large battery pack and electric drivetrain drove the cost of construction upward, Tesla could have a lower margin on the base vehicle, and still be profitable.

    Basically, if the Model ≡ 60 costs $29,665 to make at the 15% margin level, it is within striking range of the claimed average build cost that would be assigned to a base BMW 320i at $29,246 -- and you'd get a much better car. Even if it cost so much that the base version only cleared the 6% margin level at $32,806 it would be acceptable. I'm just more confident than most are that Tesla will not have to cut corners or cut profits on the base vehicle itself -- because they won't have 'independent franchised dealerships'.

    I fully expect that the average sale price of the Model ≡ will be well over $34,900 -- likely around $45,000 or so with minimal options on a Model ≡ 85 that I project will list at $42,900. Yes, there will be upgrade options galore, so a person will be able to customize their car plenty of ways. But I think that Tesla will make even the base version of the car rather well equipped, at least to a level that someone looking at a Toyota Camry LE wouldn't think it was 'missing' anything. Tesla will not want to be seen as either gouging or nickel-and-diming their Generation III Customers.
     

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