Fair enough.
It still seems pretty shady to say the car starts at $35K in the present when it doesn't.
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Tesla Removes Mention Of Standard Range Model 3 From Its Website. What's Going On?
- Thread starter Exscite
- Start date
Fair enough.
It still seems pretty shady to say the car starts at $35K in the present when it doesn't.
If you have a $200k mortgage and quit your $120k a year job to flip burgers for minimum wage, you will get a paycheck, but lose your house...
The job is profitable, but not enough to pay your bills.
If they cut your hours in half and you have to commute, then the job itself might lose you money.
Your example doesn't work. A job isn't "profitable". You're confusing revenue with profit.
My bet is they are doing two things. First defining the content of the low cost low range model. And second perhaps preparing to change the content of the higher range and cost models by including the hardware for auto-driving 3.0 and perhaps even the battery chemistry. I think it a positive sign. Time will show if I am right.
Uncle Paul
Well-Known Member
From what I understand Elon is in the same camp as the rest of us. He is working hard to get the cost out of his vehicles to make them available to more and more of the population. He knows when he can get the cost of EVs down below the price of ICE, the world will more rapidly convert away from those polluting cars that are fouling the air in our city centers.
While people are focusing on the $35,000 price tag that he alluded to in his initial projections, that has always been a moving target to his goal. Initial Tesla models have always been released with the higher optioned (priced) confugurations released first and the base units later. This is manditory to recover intital development and production costs, but are traditionally reduced as they figure out ways to take costs out of the initial production.
I expect the $35,000 base price will just be a target, with further reductions working towards perhaps even a $25,000 cost.
Developments in the Giga Factory reducing battery costs and taking some production out of high cost California and moving it to lower cost Nevada will go a long way to achieving this goal. Reductions in production and labor costs in their upcoming China gigafactory will also go a long way to reducing the street price of all their cars.
The world needs low cost electric personal transportation as our cities get more and more congested. The health of mankind is at stake.
I can see a future of quiet urban transportation, including electrified cars, trucks, busses, and scooters. Everybody going quietly and efficiently on their way. Hope to someday not see citizens wearing filtering masks, just to go out of their homes.
While people are focusing on the $35,000 price tag that he alluded to in his initial projections, that has always been a moving target to his goal. Initial Tesla models have always been released with the higher optioned (priced) confugurations released first and the base units later. This is manditory to recover intital development and production costs, but are traditionally reduced as they figure out ways to take costs out of the initial production.
I expect the $35,000 base price will just be a target, with further reductions working towards perhaps even a $25,000 cost.
Developments in the Giga Factory reducing battery costs and taking some production out of high cost California and moving it to lower cost Nevada will go a long way to achieving this goal. Reductions in production and labor costs in their upcoming China gigafactory will also go a long way to reducing the street price of all their cars.
The world needs low cost electric personal transportation as our cities get more and more congested. The health of mankind is at stake.
I can see a future of quiet urban transportation, including electrified cars, trucks, busses, and scooters. Everybody going quietly and efficiently on their way. Hope to someday not see citizens wearing filtering masks, just to go out of their homes.
Nope. Revenue is gross pay, commuting is an expense. If expense is greater than pay, you lose money going to work.
If expense is less than commuting cost, you profit going to work.
If that profit is less than your housing costs, you run a deficit and end up bankrupt.
Sure they have a choice, they can (and likely have to) choose to not do it. It's unlikely that it's just a coincidence that they now list the bullcrap price of the MR to be just under 35K.
They don't have scale or much of anything and they manufacture in what is about the most expensive locale in the US. If there's ever a 35K version of the Model 3, it will probably be extremely short-lived (just like the S40).
Finally someone gets it...the SR battery pack will see the road sooner than you think...
CameronB
Member
Obviously Tesla will only sell vehicles at a profit - and they prefer a 20% or more margin. So that means a $35K vehicle has to get down to $28K cost to Tesla. I believe Elon mentioned (in a leaked - or perhaps "leaked") internal memo not long ago that the current cheapest vehicle they could make (presumably the mid-range model) was costing them (Tesla) $35K. Add 20% profit margin and you have $42K. Which is about what the cheapest car you can buy from Tesla.
On the earnings call, Elon mentioned they were working to drive down prices even further. A new short range battery pack should provide a decent drop in costs in itself. But some kind of standard interior will help. Rumors are this will include textile seats, no ambient lighting and non-folding mirrors. Maybe other cost savings as well.
I think that they still don't know when they will be able to make a car for $28K that they could sell for $35K yet. There have been delay after delay. So I think now they've just decided to focus on the cars they have for sale now. And hopefully the $35K SR car will come back to the configurator when Tesla is truly in a position to (finally) deliver that car for that price. That is my guess. But time will tell, I suppose!
On the earnings call, Elon mentioned they were working to drive down prices even further. A new short range battery pack should provide a decent drop in costs in itself. But some kind of standard interior will help. Rumors are this will include textile seats, no ambient lighting and non-folding mirrors. Maybe other cost savings as well.
I think that they still don't know when they will be able to make a car for $28K that they could sell for $35K yet. There have been delay after delay. So I think now they've just decided to focus on the cars they have for sale now. And hopefully the $35K SR car will come back to the configurator when Tesla is truly in a position to (finally) deliver that car for that price. That is my guess. But time will tell, I suppose!
Jobs have to be profitable.
There's accounting profit - you make more than the cost of getting to your job.
There's economic profit - what alternative job opportunities you have given up by taking your current job.
@mongo can correct me if I am interpreting him wrong but I think what is being illustrated is:
If Model 3 is sold for $35,000 but cost $33,000 - Tesla makes $2,000 per car.
Even if SG&A is all accounted for in the $33,000 Tesla is still dead. They have debt payments that is continuing to accrue interest. 2000 profit on a per unit basis is not enough to keep the lights on.
They have to sell mixes of 3P, 3AWD with software to bring ASP up well beyond $35K.
I think Tesla needs an EPS of at least 0.01 in Q1 but I hope they pull off a surprise.
Yay, but you need to add in the variable vs fixed cost aspect which gets better with volume.
If you build twice as many widgets with the same infrastructure and labor, your gross margin per widget improves.
Things that have improved since May:
Production volume
Production efficiency
Payments for the line
Company debt payments (after March 1 or so)
Pack costs (once the new SR line is set up at GF1)
Did you remember the 2016 unveiling...?
I will repeat it again, Tesla have to release a 35k car. Hundred of thousands of people have put a deposit 3 years ago waiting for the Tesla for the "masses". It was THE bold statement of that historic unveiling.
Since the inception of Tesla, in Tesla's masterplan, the goal is to offer a cheaper Tesla.
They cannot just go away with it. The magnitude/influence of that 35k model is huge, imagine the consequences of dropping it.
jeffro01
Active Member
Keep telling yourself that... This is a very simple profitability situation... Tesla can't make the Model 3 SR at $35K and still make a profit off of it and until that time comes, there isn't going to be a SR available for sale. Given the supposed overwhelming demand for MR/LR, why would Tesla even offer something it can't make money on?
Like it or not, Tesla is send VERY strong signals that the $35K SR Model 3 will not be coming to market anytime soon, if ever. You can dislike my post(s) all you want but Tesla has been down this road before and we know how it ends...
Jeff
jeffro01
Active Member
Of course they can and at this point the blowback would be minimal and short lived... The importance of the 35K number has been greatly diminished based on the sales of the more expensive models. I'd love to know Tesla conversion rate versus how many people are actually waiting for the SR...
Jeff
Knightshade
Well-Known Member
errr... Elon was pretty clear that the "overwhelming demand" still out there is from people who can not afford the current model 3 prices
So literally the only way to supply that demand would be for Tesla to lower the price of the Model 3.
Which means either losing profit on existing models, or finding a way to sell a cheaper model 3 at a profit.
jeffro01
Active Member
While you're not wrong from a perspective of what Elon has said, the reality is so long as Tesla can sell the MR/LR as fast as they can make them, there is absolutely zero reason to sell the SR. Elon said the same thing about the Model S in the early days as well...
Until Tesla can no longer sell enough MR/LR to keep up with manufacturing capacity, you'll simply never see the SR...
Jeff
SR uses less cells, so if Panasonic is the bottleneck, they can sell more SR than MR or LR. Tesla could also produce 10% SR to lessen the backlog of long term reservation holders. Not the most money, but gains good will.
voip-ninja
Give me some sugar baby
Musk has already stated that the SR is going to get a new pack design and he's also strongly insinuated that the bandolier style assembly used in the MR/LR pack is overly complex and expensive.
My expectation is that Tesla needs time to complete the new pack design, build units for testing and evaluate them. Likely this new pack design will actually be what they use moving forward for all of the Model 3 range if it is modular. This is going to take a lot of time, say 1 year from when they did the initial design piece... most companies it would take 2-3 years.
Taking the LR/MR pack and just shorting it more cells in order to immediately produce an SR seems like a losing strategy for Tesla from a cost benefit perspective.
Agree, a depopulated pack doesn't make sense for SR.
I was talking about if Tesla was cell limited, but Fremont had more capacity.
I'm guessing the SR pack was already vetted before the machinery left Germany (assuming Grohmann built it in house). Elon's Tweets indicate is should be ready the next couple months...
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