Tesla is doing things a little different than traditional automotive manufacturers. However, if they were following norms, the UBS research group says that the Tesla Model 3 would have to sell for $41,000 to break even.
It’s an interesting dynamic that Elon Musk has created, Statisticians don’t know how to evaluate Tesla’s many projects, falling back to historical comparisons. Thus, this $41,000 figure is based on a tear down and cost analysis of the Chevy Bolt EV.
Please forgive me, I worked at a General Motors dealership about three years before the company went looking for government assistance to pay the bills. At that time, it cost nearly $13,000 per car, no matter which car, to cover employee wages and benefits. That was just manufacturing, a car then ‘sold’ to a dealership which had its own staffing costs before the consumer could drive off the lot.
GM is doing much better now, but to me the Chevy Bolt EV is from the same old struggling company. To me, the auto industry is still a massive machine with too much overhead. The simplicity of Tesla‘s approach is very appealing, and, I believe, far more cost effective.
With that out of the way, actual manufacturing costs are a little more predictable. Using the Bolt EV as the benchmark, a car that is built largely on systems from suppliers like LG, we are still having a hard time with this report.
Tesla, as much as possible, is building systems in-house. Specifically, the motors and battery packs. However, we’ll go with the findings, UBS did put a ton of effort into their report, and certainly know more on the topic than I.
At the projected $41,000 to break even, and a base price of $35,000, options and upgrades would be necessary for Tesla to make a profit off of the Model 3. We already know that GM is expecting to sell the Bolt EV at a loss, could Tesla be doing the same, or does building in-house really save that much money?
Be sure to hit the ‘Via’ link below to see the full report.