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Model 3 Margins - taking a stab !

Discussion in 'TSLA Investor Discussions' started by Quant, Jan 31, 2016.

  1. Quant

    Quant Member

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    #1 Quant, Jan 31, 2016
    Last edited: Jan 31, 2016
    I was thinking that maybe we can pool our backgrounds to take a stab at potential margins for the Model 3. So, I think it's best to take a stab at margins when Model 3 is producing at a 100 k annual run rate ( say in 2019), and Model X + Model S, in that year, is at least another $100 k run rate, for purposes of spreading non-direct production line costs over a larger total production base for the entire product line.

    I realize this is , at least, gonna be a very high level approximation, with an inherent high error rate. Hey, but maybe it's worth a start at a stab ?

    First, a few assumptions ( please feel free to correct, as appropriate ):

    1. Starting price in the US of $35k, and assume on average the production model buyers will add , say, $5k in options ( could be more if Tesla offer a 10 kWh range upgrade for say $2,500)

    2. I'm assuming the SuperCharger network will be included, but who knows maybe it will be a $1500 or more option.

    3. Potential Other options have be thoroughly reported here already by others.

    4. Battery costs by 2019, for a 60 kWh no more than $ $7000 ( note that JB Straubel said that Tesla would be very disappointed if battery costs were more than $100 per kWh by 2020).

    5. Sales and marketing costs of $1,500, per unit, as suggested by Elon when discussing recent referral incentive program.

    6. So, now we need some estimates for drive train, motor, skin, wheels, tires and interior, mirrors, sensors and what I would call misc parts ( other than options ).

    7. Then we would need some sort of plug in for software, and other amortizated production line and R & D costs.

    8. Once we have that we can then take a stab at service center, warranty, supercharger network and other admin and corporate overhead ( which should be a lot lower once we are at 200 k annual volume run rate ) based on the P & L and info on past earnings Conf calls.

    So, I don't know if this is a fool's errand ( could be) but thought I'd at least try to get some sense from those in the industry for drive train, motor, wheels, tires, skin, interior, mirrors, sensors etc.

    At least a stab at all of that could give us some sense of the range of where the costs could potentially fall.

    The objective here is simply to explore the likelihood of a minimum 30 per cent operating margin, at a total production volume run rate of 200 k units in 2019.

    If folks or Mod think this is not worth it or should not be a new thread ...please edit accordingly. Thanks.
     
  2. dakh

    dakh Member

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    It probably would be much more accurate to just find out how much making a traditional ICE drivetrain costs and then estimate the difference from there. I actually tried to find that data for myself a while ago to make this exact estimation but didn't come up with anything specific enough to work with. It's not exactly right to do a direct comparison, my perception is that making an electric car is somewhat easier/cheaper to make due to much more freedom in packaging and meeting safety. But at least we can have a ballpark number.
     
  3. Spidy

    Spidy Member

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    #3 Spidy, Feb 1, 2016
    Last edited by a moderator: Mar 13, 2016
    Those suppliers informations are top secret. There are companies that do benchmarks and sell the data, but that's REALLY expensive to buy e.g. Munro Associates, Inc. | Home of Lean Design and Design Profit

    Here is a talk about the BMW i3



    Overall I think you are thinking far to low. 5k in options is the minimum in my opinion. I expect average closer to 45-50k
     
  4. Quant

    Quant Member

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    #4 Quant, Feb 1, 2016
    Last edited by a moderator: Mar 13, 2016
    Thanks, I'm sure we can get some info. The BMW i3 looks like ****....sorry ! It's a box! But good luck to BMW. They are gonna need it.
     
  5. electracity

    electracity Active Member

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