Tesla: Model 3 Base Battery Less Than 60 kWh, “All-In” Pack Costs Already Under $190/kWh

1 year ago by Jay Cole 193

Tesla Model 3 To Come With Battery Smaller Than 60 kWh And Full Pack Costs Less Than $190/kWh

Tesla Model 3 To Come With Battery Smaller Than 60 kWh And Full Pack Costs Less Than $190/kWh

This week, UBS analyst Colin Langan suggested his research indicated that any base Tesla Model 3 cars sold at $35,000 would be done so at a significant loss; mainly due to the still relatively expense costs of the e-drivetrain and advanced production parameters of the car – a statement that I think many of can agree with.  The money is in the options

For his part, Elon Musk earlier suggested the day of the Model 3’s introduction that he believed the average selling/optioned Model 3 would net the company about $42,000.

Elon Musk Thoughts On Average Model 3 Selling Price (@elonmusk)

Elon Musk Thoughts On Average Model 3 Selling Price (@elonmusk)

UBS’ Langan hosted a call on the Model 3 with Jon Berisa (President & CEO of Auto Lectrification), who also served 35 years with GM, some of which as a chief engineer on the Chevy Volt.

Mr. Bereisa noted a “best case” for final battery pack costs (not just the cells) comes in at about $133-155/kWh in ~9 years times.

Tesla Model 3 Debuted March 31st, 2016 - 215 Miles Of Range, From $35,000

Tesla Model 3 Debuted March 31st, 2016 – 215 Miles Of Range, From $35,000

Reports the StreetInsider:

“In a detailed breakdown of factory variable cost (FVC), Jon sees the Model 3’s FVC $1,510 above base price of $35k vs. the Bolt’s FVC $4,980 below base price of $37.5k. Compared to the Bolt, the Model 3 adds incremental variable cost from its aluminum content, lack of scale, extra sensors, a faster propulsion system, and higher pack costs. Jon estimates TSLA’s pack costs at $260/kWh and GM’s at $215/kWh (due to GM sourcing the cell at-cost from LG).”

So an interesting report to be sure…and then Tesla’s head of Investor Relations, Jeff Evanson called in to take it up a notch, and to dispute some of the conclusions of the pair.

The first issue taken with the report was that the Model 3 is actually only partially aluminum, not all-aluminum to the extent of the Model S, and the second issue was on the size of the Model 3 battery, and what the actual battery pack costs are today for the Model S/X, and how the “maths” based on all those figures work out on the Model 3.

Specifically:

  • the Model S/X “all-in” battery pack costs today is less that $190/kWh, and
  • that the Model 3 will have a base battery sized smaller than 60 kWh

The question now of course is how much below 60 kWh can the model 3 actually be to net the estimated 215 mile range pegged by Tesla at the vehicle’s launch last month?

Given the upcoming Chevrolet Bolt EV has a 60 kWh battery and early estimates by “sources” for that car have its EPA rating landing around 210-220 miles, it could not be too much less.  Perhaps ~55 kWh?  Nissan’s 2016 SV/SL LEAF achieves 107 miles of range on 30 kWh…but is aerodynamically a laggard in the EV space compared to many of its peers.

StreetInsider

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193 responses to "Tesla: Model 3 Base Battery Less Than 60 kWh, “All-In” Pack Costs Already Under $190/kWh"

  1. David Murray says:

    Sounds to me like the battery pack in the model III would cost around $8,000 to $10,000. Gigafactory may be able to produce it cheaper. That’s really not all that much, since it is only 28% the cost of the car. That means there’s another $25,000 that can go into building the rest of the car. I don’t see why it couldn’t be made and sold at a profit.

    However.. There’s always the possibility that the Model-III will be sold with a smaller, cheaper battery as an option. I know that didn’t work out so well on the Model-S, but that is a luxury car and the buyers have deep pockets. There will be a lot of people that want to buy a Model-III at the limit of their budget and might be more interested in one that has maybe a 40 kwh battery and maybe 150 miles of range for $3,000 less money.

    1. Speculawyer says:

      I don’t think they would sell a 40KWH version. I think Elon has decided that 200 miles is a minimum that has to be reached. And Supercharging the 40KWH version would probably go pretty slow. And it would screw up the spacing between superchargers.

      But I guess they could sell it as a cheap option but say “No supercharging allow for 40KWH versions but you can upgrade to a 60KWH battery later if you want a bigger battery & supercharging.”

      1. Dragon says:

        I agree. You can’t make it between a lot of the superchargers safely with under 200 miles of range, so I don’t think Tesla will ever release a sub-200 car.

        1. SopFu says:

          If supercharging spacing is the biggest reason to not make a sub-200 mile car, there are much bigger problems. I suspect supercharging availability to be a big problem if the M3 comes out in mass numbers with supercharging included or purchased by a significant number of buyers. Tesla is going to have to build out the network to satisfy demand, and spacing should not be the issue.

          1. John says:

            During the ≡ release, Elon did mention that they were going to double the number of superchargers, and quadruple the number of destination chargers. So that 200 miles gap between may be shrinking…

            1. Pushmi-Pullyu says:

              Hmmm, but did that mean doubling the number of locations, or only the number of stalls? Of course, the answer is “some of both”, but lately in the U.S./Canada it looks like Tesla has been concentrating much more on increasing the number of stalls at existing locations, rather than building new locations.

      2. Battery Bro says:

        Seconded, however with caveat. There is a possibility the 200 range was in an early feasibility study, and that as urban centers get denser, and sales to countries without as much sprawl increase, a model with a lower range might be feasible for consumer adoption.

        Regarding the sub $200/kWh 18650 batteries, they are coming. Anyone can say they will come in ~9 years though, this is not an impressive prediction.

        1. Battery Bro says:

          Oops, I don’t see an edit function but should correct myself. The prediction was for sub $133-155/kWh in ~9 years, and that sub $200/kWh has already been reached. In any regards, would love to see Mr. Bereisa’s function for this prediction. Many believe it will come a bit sooner.

    2. evcarnut says:

      I sure do hope we don’t get any Nasty Surprises with this M3 when delivery time approaches….

      1. Trollnonymous says:

        On a first generation product?
        No way. lol

    3. Someone out there says:

      They already promised that the base model would go at least 215 miles on a charge. They can’t back out of that now

    4. R.S. says:

      Like you said, the pack will ne a relatively small part of the car. So 15 kWh saved, could just mean $2.500, or even less. So rather small savings for a $35000 car. And you also loose performance. In the end it might not make sense, at least for a car like the Model 3.

  2. Speculawyer says:

    Less than 60KWH? They must have a really nice Cd then. I doubt it is much less than 60KWH though.

    So assuming 60KWH * $190/KWH = $11,400 for the battery pack. So only $23,600 for the rest of the car then. That is gonna be pretty hard.

    Perhaps the stripped model will be break-even and they’ll rely on optioned out models to make a profit?

    1. Alain says:

      À car doesn t cost That much to mâke,Belive me it,s cheaper than You can imagine. Ordinaire parts are supercheap for oem.electric motors costs very little to make,i Work every day in this field and mark
      Up is 10x thé price.the hole car is 5000 to 7000 .

    2. Doggydogworld says:

      The Model S 60 was rated at 208 miles. If the Model 3 has the same Cd, 10% less frontal area and 10% less weight a 54 kWh pack should deliver the same 208 miles.

    3. Rob Stark says:

      The current cost for Tesla battery packs is below $190 per kWh.

      The 2017 price, conservatively,is below $133 per kWh. At least a 30% reduction and at least 50% reduction from current prices in 2020 with GF at full scale.

      Pack cost for base Model 3 is roughly $133 x 55= $7315. A BMW 3 Series glider cost ~$21k. In other words base Model 3 will have a net positive margin. With an ASP of $42k Model 3 will be quite profitable.

      GM is buying cells(not packs) at $145 per kWh and that price is locked in through 2019. And it appears this is an LG Chem loss leader to sell GM an entire BEV kit for GM’s Bolt glider.

      1. Pushmi-Pullyu says:

        Rob Stark said:

        “The current cost for Tesla battery packs is below $190 per kWh.

        “The 2017 price, conservatively,is below $133 per kWh. At least a 30% reduction and at least 50% reduction from current prices in 2020 with GF at full scale.”

        No, that would be the reduction in the cost of the cells alone. Not the “all in” cost of the battery pack. I doubt they’ll be able to reduce the cost of the other things in the pack by much. A water pump or two, tubing, BMS, wires, fuses, metal casing… not much room for cost reduction there.

        They might be able to bring the assembly cost down somewhat, though, if they can increase the degree of automation.

        1. arne-nl says:

          Do you mean absolute cost reduction or relative?

          In absolute terms, not, since the BOS (balance of system) costs of a battery pack are relatively small. The pack costs are dominated by cell costs.

          But in relative terms, it is a different story.

          I see it as a situation analogous to PV systems. For a long time, panel costs dominated the price of a PV system. Inverter costs were relatively stable until the panels got dirt cheap, and BOS costs started to dominate. This has resulted in an increasing price pressure on the other components of a PV system. As a result, inverter prices have been dropping considerably.

          As cells get cheaper, the BOS portion of the pack costs gets bigger, and the pressure to reduce costs larger. Never underestimate the capability of innovation to reduce price of seemingly mature technology.

          One thing may be clear: there is immense pressure on Tesla to reduce cost. They can not afford to skip anything. Each and every part of the Model 3 will have to be squeezed for every penny. Only then will they be able to save enough pennies so that they add up to pounds.

          1. Pushmi-Pullyu says:

            arne-nl said:

            “Do you mean absolute cost reduction or relative?”

            What I mean is, Elon and/or other Tesla spokesmen have asserted the Gigafactory will reduce their cost for cells for their cars by 30-50%. Whether that’s absolute or relative cost, seems rather irrelevant. They have not said they can reduce the pack-level costs that much.

            “The pack costs are dominated by cell costs.”

            Yes, and it looks to me like the non-cell costs have been a shrinking percentage over the past few years. A few years ago, the rule of thumb seemed to be that the pack cost was about twice the cell cost. These days, it seems the rest of the pack costs only about 1/2 to 1/3 the cost of the cells alone.

            However, 1/3 or 1/4 the total cost of the pack is still a significant fraction.

    4. Speculawyer says:

      Oh wait . . . they are at $190/KWH ‘all in’ at pack level RIGHT NOW for the Model S & X.

      So the Gigafactory should push that down more. So even if they fail at pushing down the battery costs by more than 30% as targeted, just pushing it down by half that. half that will put the Model 3 battery price at a good level.

      $190/KWH * 60KWH * 0.85 = $9690. So $25K to make the rest of the car. That is doable.

      Tesla just needs to learn how to run a lean mean factory and crank those Model 3 cars out.

    5. SparkEV says:

      We know Tesla S60 has Cd of 0.24 and 208 miles range. Tesla 3 will have Cd of 0.21 (87%), and they plan to make it better as well as having smaller frontal area (about 85%). To keep 208 miles range just going by these, battery would be

      60 * .85 * .85 = 44 kWh

      1. Speculawyer says:

        No way will it be that small. Model 3 might be a little more aerodynamic but it doesn’t change things THAT much. Plus it will have a fair amount of heavier steel instead of aluminum.

        Besides . . . they need a decent sized pack in order to get good performance and fast-charging. I suspect not smaller than 55KWH.

        1. SparkEV says:

          Actually, I made a mistake. Aero is not 100%, but more like 75% or even less. So the better math is

          (60*0.25)+(60*0.75*0.85*0.87) = 48 kWh

          If 50% is assumed due to better aero and heavy weight

          (60*0.5)+(60*0.5*0.85*0.87) = 52 kWh

          Therefore, I suspect 50 kWh. How did you arrive at 55 kWh?

          1. Priusmaniac says:

            Having 55 KWh instead of 50 KWh allow a better assurance to have 200 miles range when you account for battery aging, cold weather and less advantageous driving conditions (rain, snow, …).
            Large pack would likely be 70 KWh and allow 270 miles.

          2. Neil says:

            I get around 3.6 miles per kWh in my 24kw Nissan Leaf so at this usage you would need 59kw to get 215 miles but I live in a hilly area. I think the model 3 will have a 4 mile per kwh so would need a 54kwh battery tesla will still fit a 60kwh pack to the Base model as you will only get a usable 55kwh out of the pack to prevent damage

          3. SparkEV says:

            My calculation is based on announced aerodynamics alone, and ignore any weight savings from S (should be bit lighter) as well as more efficient electronics. Combined, they would need even less than 50 kWh for 215 miles.

            The question is, how did these guys estimate 55 kWh? Pulled out of where?

          4. ModernMarvelFan says:

            “(60*0.5)+(60*0.5*0.85*0.87) = 52 kWh
            Therefore, I suspect 50 kWh. How did you arrive at 55 kWh?”

            It isn’t surprising to have 52kWh usable range out of a 55kWh battery pack.

            1. SparkEV says:

              That’s on high end guess based on rolling and static power are the same as S as well as 50% power for aero. Typically, aero will be far more, and static and rolling power will probably be less on 3 compared to S.

              You can do the math based on 55 kWh / 0.21 Cd, and it becomes far more than 215 miles range, especially when aero is higher than 50% of power.

              Therefore, 52 is high end guess, 48 typical (maybe still bit high). Of course, I wish it would be even less, 40 or even 30, but probably not for Model 3.

        2. SparkEV says:

          We can also look at it another way. SparkEV does 5 mi/kWh at 62 MPH. Assuming Tesla 3 does 10% worse at 4.5 mi/kWh, 215 miles would need

          215 / 4.5 = 48 kWh (round to 50 kWh)

          But if 55 kWh is assumed for 215 miles,

          215 / 55 = 3.9 mi/kWh

          It’s hard to imagine Tesla 3 being over 20% worse than SparkEV. That’s why 50 kWh is more likely.

          1. arne-nl says:

            I think you forgot to include the difference between nominal and usable capacity.

            1. SparkEV says:

              You’re probably right in that comparison to SparkEV isn’t as good. But extrapolation from Tesla S is probably closer to real. then see my comment above.

      2. Alaa says:

        Just imagine how many will buy this car if it had a pack that is 100kWh and a range of 600 miles.

        The reservations surly passed 500,000 by now.

        And if the kWh is for $190 then a 100kWh is under $20k so it makes sense. The pack for $19k the body for $20k add $3k for supper charging and you will get $42k and a 600 miles range.

        Perfect.

        1. Speculawyer says:

          I would have no interest in that. That is just a lot more money to pay and weight to lug around for something i would use 1% of the time. 75kwh battery for a large option would be great for me.

        2. arne-nl says:

          Yeah I guess even more would be interested if it had a 25 kWh battery and a range of 1200 miles. 😉

          100 kWh and 600 miles of range is > 6 miles per kWh (usable capacity is lower than nominal).

          Tesla has done miracles, but even they can not build a decent sized, safe family car with good performance traveling more than 6 miles per kWh.

          600 miles of range would need a 150 kWh pack or more. But I don’t think they will be able to squeeze that into the Model 3. Maybe in the more distant future, but not in 2017.

          1. Pushmi-Pullyu says:

            Indeed, there is no way the Model ≡ is gonna get 6 miles per kWh. Even the highly efficient BMW i3, with its CFRP body, only gets about 3.7 miles per kWh.

            If the Model ≡ gets 215 miles from 55 kWh, then 100 kWh would give it 389 miles, or actually a bit less because the car would weigh more.

            1. Priusmaniac says:

              103 KWh starting from the larger 70 KWh pack and with an 8% improvement in battery per year would take five years. So a 400 miles Model 3 would become possible around 2021. That’s amazingly close.

            2. Peter says:

              How do you type the ≡ sign?
              Do you just copy/paste it from somewhere, like I just did here from your post, or do you type some ascii code?

              1. MTN Ranger says:

                Alt key 240

                1. Pushmi-Pullyu says:

                  …on a Windows computer, yes. Thanks!

    6. Terawatt says:

      $190 / kWh was the cost TODAY for the packs in Model S/X.

      With the gigafactory Tesla expects to shave 30% off, which gets us to $133. Perhaps even greater reductions are possible. The chemistry is evolving towards higher density and reduced cost. They’re looking at moving from 18650 to a cell about 10% wider and 10% longer, which should have the same effects (higher density and lower cost).

      Clearly they won’t have the full economies of scale in 2018. And the batteries hopefully won’t stop improving for decades to come, also with respect to cost. Even so, I wouldn’t be shocked if Teslas *total* cost per kWh can match the Bolt’s *cell* cost of $145 per kWh already in 2018.

      At least I hope Tesla knows what it’s doing!

      1. ModernMarvelFan says:

        “Clearly they won’t have the full economies of scale in 2018. And the batteries hopefully won’t stop improving for decades to come, also with respect to cost. Even so, I wouldn’t be shocked if Teslas *total* cost per kWh can match the Bolt’s *cell* cost of $145 per kWh already in 2018.”

        GM stated that by the time Bolt comes out the cell price is $145/kWh. And by 2020, it will be $100/kWh.

        That is 31% improvement… Sounds right on track matching Tesla’s 30% cost reduction.

  3. MTN Ranger says:

    I doubt it’s less than 55kWh, the weight is still probably around 4000 lbs or more compared to 3580 for the Bolt. The low drag coefficient will help on highway speeds but weight will penalize in the city.

    1. Alaa says:

      Your numbers don’t add up!

    2. Zach says:

      If they are using more aluminium and higher density batteries, why would it weigh more than the bolt?

      1. Pushmi-Pullyu says:

        Tesla is not using much aluminum in the Model ≡ body. It will be steel to save money. Tesla has said this more than once; the reference(s) to aluminum in the article are an indication that someone has not been paying attention… as usual, when it comes to so-called “analyst” articles about Tesla Motors and its cars.

  4. jelloslug says:

    My guess would be a 55kWh base and an optional 70 or 75kWn upgrade

  5. Rick Bronson says:

    Many banks, investment companies, insurance companies are out there to talk bad about Electric cars and give false stats.

    Yes the battery cost of Model-S/X should be only $ 190 / KWh because last year it was $ 300 / KWh and every year its dropping by $ 100 / KWh.

    Next year it should drop to $ 100 / KWh and certainly Model ≡ will make a profit.

    We have to tell everyone that Model ≡ has racked up 400,000 reservations and that’s good enough.

    1. sven says:

      By that logic, in two years the battery cost would drop to $0/KWh, making it essentially free.

      1. Errol says:

        sven:

        Don’t tell Rick Bronson that his silly logic would have the battery be free in just 2 years….he will go into celebratory convulsions.

        1. Jacked Beanstalk says:

          If you really want to blow his mind, tell him what happens in three years: Tesla get paid $100/KWh to use the battery!

    2. arne-nl says:

      “We have to tell everyone that Model ≡ has racked up 400,000 reservations and that’s good enough.”

      I’m a huge fan of Tesla and an investor, but I’d rather not be part of a mindless horde of hallelujah singers. 😉

    3. Pushmi-Pullyu says:

      Rick Bronson said:

      “…last year it was $ 300 / KWh and every year its dropping by $ 100 / KWh.

      “Next year it should drop to $ 100 / KWh…”

      So then, we should wait three more years, then Tesla will pay us $200/kWh to take batteries from them?

      I think there is a faint possibility there just might be a flaw in your argument somewhere…

  6. Pinewold says:

    Another case of careful “analysis” that is clearly just a stock shorter trying to drive down the stock. Did they notice the Bolt has aluminum body panels? Did they notice that model 3 has scale? They just made up detailed number that came to a forgone conclusion.

    1. sven says:

      The analysis was done by “Jon Berisa (President & CEO of Auto Lectrification), who also served 35 years with GM, some of which as a chief engineer on the Chevy Volt.” I seriously doubt that he is a stock shorter.

      1. Pushmi-Pullyu says:

        Perhaps he was referring to “UBS analyst Colin Langan”, mentioned in the beginning of the article. Since he predicted any $35,000 Model ≡’s would be sold “at a significant loss”, it seems reasonable to assume this “analyst” is indeed trying to short-sell Tesla stock.

    2. Mart Shearer says:

      ” Compared to the Bolt, the Model 3 adds incremental variable cost from its aluminum content, lack of scale, …”

      The scale of Bolt or Model 3 production has yet to be seen. It may well be proven that Tesla produces the 3 on a larger scale than Chevrolet produces the Bolt.

      1. arne-nl says:

        To me, that also seemed to be the biggest oversight of this analyst, not to say, a glaring mistake. You have ask yourself how reliable the rest is.

        But the message is clear. Tesla will have a tough time making a profit. Just as every car company has a tough time making a profit. It’s one of the most unforgiving industries.

      2. Pushmi-Pullyu says:

        Mart Shearer said:

        “The scale of Bolt or Model 3 production has yet to be seen. It may well be proven that Tesla produces the 3 on a larger scale than Chevrolet produces the Bolt.”

        Tesla and GM have pretty clearly signaled the relative scale of planned production. Tesla is investing billions of dollars in a battery Gigafactory so they can scale up production to a planned ~400,000 per year… and with the unexpectedly high number of reservations, Tesla may well try to increase that number in the coming years.

        Contrariwise, GM farmed out the entire EV powertrain to LG Electronics and LG Chem, clearly signalling they don’t plan to produce the Bolt in large numbers. That’s what you do if your an auto maker who wants to limit startup costs on a model you don’t plan to sell in large numbers. Toyota did the same with the RAV4 EV, farming out the entire EV powertrain to Tesla, again to save startup costs.

        If GM had any plans to produce the Bolt in large numbers, they would have (a) made the powertrain in-house as far as practical, and (b) started building their own large battery factories.

        1. ModernMarvelFan says:

          “If GM had any plans to produce the Bolt in large numbers, they would have (a) made the powertrain in-house as far as practical, and (b) started building their own large battery factories”

          Before GM invest in plan to produce more, it has to believe there are enough demand there. Is there? Well, there is for the Model 3. But is there enough demand for the Bolt to justify more investment? So far not a single non Tesla maker has broken the 25K/year barrier. Why would GM risk more until there are established demand?

      3. theflew says:

        GM does have economy of scale. The Bolt is on a new chassis, but it does share suspension components with the Sonic/Trax/Encore. Non EV components would be lifted from other cars. Even the rearview mirror/LCD is being used by Cadillac first. The safety assist technologies are on a large number of GM cars already.

        So even with lower volumes the Bolt has a cost advantage. That’s why it’s hard to believe the Model 3 has a lower MSRP. Either GM is making a healthy profit or Tesla is low balling the price and forecasting their cost will come down in time to meet that target.

  7. Taser54 says:

    IMHO, Tesla would only be able to produce the $35000 model at a profit if the Gigafactory was running at full capacity. That is why that model will not be produced for 3+ years.

    1. Speculawyer says:

      Naww . . . they could at least start selling a year’s worth of heavily optioned out cars which would raise the selling price to a profitable level.

      1. Taser54 says:

        I referred to the $35000 “model”

  8. M st. J says:

    I imagine the first year or two sales will average $50000/unit. By then the factory might be producing battery packs for basic Model IIIs to be sold at a small profit.

    1. Ryan H says:

      This is exactly correct, the first year of shipments will be disproportionately max’d out cars possible reaching as high as $65,000 (similar to BMW M3) for the Model 3 PxxD with ludicrous. They will have plenty of time to scale production of batteries and make their production line more efficient before they will actually be rolling any $35,000 versions off the line.

      1. TomArt says:

        Yep, that’s what they did with the S and X. Makes sense.

      2. Pushmi-Pullyu says:

        Well said, Ryan H. From what I’ve read, it’s typical for a new car model to make no overall profit in the first year of production. Tesla beats that average by selling only “fully equipped” cars during the first several months of production. Only after Tesla is able to ramp up production, and thus bring unit costs down, do they put the lower trim levels into production.

    2. Murrysville EV says:

      As a Model 3 reservist, if I’m forced to configure a $50k car, I’ll back out, and so will many others.

      History aside, that’s not what I signed up for.

      1. TomArt says:

        Nobody is going to force you to do anything of the sort. The point is that the larger battery pack versions, fully-optioned models, are most likely going to be prioritized. So when you are invited to configure your vehicle, the timeframe in which you will actually receive it will be, in part, dependent on the options you select. This will not always be true, but until they work through the existing backlog, then that will be the case.

        At least, that’s how the initial Model S deliveries were managed.

  9. JWF says:

    There is some really questionable assumptions in the analysis. The cost of a vehicle is very dependent on production volume and especially so with the battery. The Bolt is considered to have a cheaper battery when the Gigafactory is making vastly more batteries with less overhead (including for power plants and solar installations). The other factor is Tesla is following the Toyota model of making all key components under Tesla engineering direction optimized exactly for the Model 3 while GM has to compromise across many vehicles. Thirdly, the best of Telsa is working on the Model three. Is the best of all GM working on the Bolt? Lastly, GMs legacy cost for unions, retirements, pensions, and other limits is much more than Tesla. All in all, it looks like this analysis used a bunch of assumptions incorrectly loaded in GMs favor. I’m not knocking GM at all, their change in corporate direction is excellent. I’m knocking the analysis.

    1. Pushmi-Pullyu says:

      Unfortunately, it’s all too common for a financial “analysis” of Tesla Motors and/or its cars to be this ill-informed. It has been very rare for me to see an analysis that seems to be well-informed.

      But I doubt this is at all unusual in the field of financial “analysis”… which is usually (perhaps nearly always) just stock promoters and shorters trying to sell their current position, and passing that off as “analysis”.

      Any properly researched and well thought out analysis, something actually worthy of the label, is likely to be offered only for a fee, not posted for free to the Internet.

  10. mike says:

    Hang on – they said the model 3 will have cost impact due to lack of scale? When the Bolt is slated to have 1/10 of the production of the annual Tesla production – I smell a rat

    1. Doggydogworld says:

      Most analysts doubt Tesla will make more than 50k Model 3s in 2018. Musk says differently, but Musk says a lot of things.

      Analysts put Bolt production at 20-30k/year, but GM says they can do over 50k if there’s enough demand.

      Bolt shares parts with other GM vehicles that together sell millions/year. That’s where his scale comment comes in.

      1. Pushmi-Pullyu says:

        There is nothing in the article to suggest they are talking only about costs for 2018, or only for the first year of production… which will come at least a year later for the Model ≡ than for the Bolt.

    2. theflew says:

      Scale comes in many forms. For GM scale means for non EV components they can just raid the parts bin for things like suspension components, door handles, switches, steering wheel, etc… Even the fancy rearview mirror/LCD is being used by Cadillac first, so it’s in the parts bin. So maybe only 50k Bolts are made, but those same parts go many other vehicles.

      1. Speculawyer says:

        But most auto parts are made by outside vendors and many are not custom for a specific car (as you point out) such Tesla can use those same tires, springs, pistons, car window motors, windshield wipers, etc. as GM.

        1. ModernMarvelFan says:

          The difference is that GM gets bulk pricing where Tesla doesn’t.

          Things like what you mentioned are discounted at far lower price when you order millions instead of few hundreds of thousands…

          Plus, I don’t expect Tesla to pull out of 100K volume in the first years. Those rate are yearly rate. So, even if Tesla use the exact same part from the same supplier, you can assume that GM pays less per part than Tesla due to volume discounting.

  11. Iletric says:

    The Tesla profit comes from the fact there is NO MIDDLEMAN. There is no invoice vs. retail pricing with the attendant haggling. The price is set and Tesla gets the whole check. That’s how it’s gonna be profitable.

    1. Daniel says:

      True, that’s a little caveat often overlooked by many.

    2. Daniel says:

      And to take it a step further, they are also taking in all replacement parts dollars and service revenue that would normally be heading for the dealer coffers. And doing it at retail! And again getting the whole check.

    3. theflew says:

      True Tesla gets the whole check, but they also have employees and retail space GM doesn’t have to support and pay for. So Tesla has fixed cost (wages, leased space, buildings, etc…). GM on the other hand pays dealers based on sales – so no sale, no money.

    4. zzzzzzzzzz says:

      It is not profit but capital hog so far and it will stay so for many years. It gives advantage that they can control everything, but they need to invest too much capital into sales center expansion, pay wages, and they don’t have some 50 billions laying around to spend.

  12. tom911 says:

    $35K base – but the profit will be in the high margin, over the air sw upgrades like SC access and autopilot. Buy the base car for $35K and add the $$ options afterward when you can afford them – Tesla makes very little on base cars but pure profit on upgrades. Thoughts??

    1. goodbyegascar says:

      Consider a future Tesla touchscreen playing a brief advertisement for upgrades that can be ordered, for a fee.

      That would allow Tesla to sell you options as you can afford them, wringing more cash from every car sold.

      Eventually, the buyer of a $35,000 base Model 3 might spend another few thousand dollars to gradually unlock the full potential of his/her prized Tesla.

      1. Speculawyer says:

        Horse armor for my car, Great.

        (Obscure reference)

  13. Kdawg says:

    Instead of making assumptions, why don’t they just ask Tesla/Elon? Tesla may surprise them with a response.

  14. Anderlan says:

    Long, long ago (2 years?) I read a decent analysis of the road trip problem (i.e. how charging speed in mph and 80% range in miles combine to give you your total trip speed). The analysis for some reason gave the usable energy of the ‘Bluestar’ (Model 3) as 55kwhr.

  15. Carcus says:

    My guess on the “must have” options:

    1. Supercharging access– $ 2,000
    2. Autopilot– $3,000
    3. HUD — $ 2,000

    That gets us to $42,000.
    (If resale value is a concern it would be hard to skip 2 and 3, imo )

    1. KUD says:

      Not sure about that. 1 is pretty important. That’s what makes the cat more then a commuter.

      1. KUD says:

        Make that Car. Those butterfingers 🙂

    2. Nix says:

      2 of these have already been addressed, and we can answer now:

      1) Supercharger access will be standard and included.
      2) Autopilot hardware will be installed in all cars, but enabling it will be an option.

      1. tom911 says:

        ‘Supercharger capable” is the new phrase on the Tesla website.

        Free SC charging won’t be standard.

        1. arne-nl says:

          And I would be perfectly fine with that.

          Supercharging will be an exception for me and those few times a year I’d happily pay for it. Just as I have to pay for fast charging my Zoe. Just as I had to pay for gasoline (long long time ago).

          I would prefer it that way, and less chance of supercharger abuse since “it is free anyway”.

          1. MikeM says:

            I agree wholeheartedly.

            The last thing we need is to see Superchargers clogged by “entitled” owners who paid up front for unlimited charging.

            I too would like to see pay-per-use in some form. I’d even pay $5/gallon equivalent for my relative handful of charge sessions per year.

            Come to think of it, a one time up-front access fee in addition to pay-per-use might be appropriate too. Otherwise we’d be replicating the fiscally unsustainable situation we already are seeing with the nation’s scattering of unprofitable (and often unmaintained) L2 and DCFC charging stations.

            Don’t want to put any millstones around Tesla’s neck!

            1. wavelet says:

              Another option would be to provide a small number of SuperCharger sessions per year (say 10) for free, for the first few years. This would nicely support a couple of long-distance trips/vacations, or a few emergency charging sessions.
              It would also encourage people to try out SuperCharging; those who need more could buy more access under some kind of reasonable business model (say, monthly subscriptions, or a 10-pack of prepaid sessions, or more expensive one-shot opportunistic charging).

    3. TomArt says:

      Well, no, at least not for the autopilot, because the hardware is standard. The buyer or any future owner can unlock the autopilot convenience features, for probably the same $3k after initial sale as the S and X now.

    4. beta995 says:

      Air-Suspension

    5. Mister G says:

      How much for the joystick option?

  16. TomArt says:

    I’ve been guessing 55kWh since the week of the reveal…I think I’ll stick to it. I’ll also stick with the upgrade being 65kWh, though I would not be surprised if it will be 70, since the X is already up to 75, and I’m sure the S will follow suit, and who knows where they will be by 2018.

    1. Pushmi-Pullyu says:

      I was guessing 45-50 kWh until GM said 60 kWh. Since then, 55 kWh has been my guess too.

      And with a Tesla spokesman saying “less than 60”, it seems very likely to be somewhere between 55-59 kWh.

  17. TomArt says:

    This does not surprise me. A few years ago, some thorough and thoughtful analyses posted on greencarreports.com pegged Tesla’s cell costs at $200/kWh, +/- $10. Now, to hear that their pack costs are about $190/kWh for what is probably a 55kWh pack fits quite well.

  18. TomArt says:

    Oh, no!! The dual-motor version will spell “ED”…

    1. Pushmi-Pullyu says:

      Not to worry. For battery geeks, that just means “Energy Density”. 😉

    2. Jychevyvolt says:

      It’s worse. The performance version will spell, “PED”

  19. PVH says:

    I need to crunch Tesla 2015 figures some more… In last episode I found out that expenses in relation with capex were only 47% of total $890M loss for 2015. Now those 47% do not include the interest expenses to service the loans (bonds issued) that were issued to finance those capex (investments) neither does it include the R&D. However it is likely those interest and R&D expenses do not represent the 53% of the 2015 loss ($470M). So it is likely that MS and MX are sold a little below overall cost (parts of a car not constituting more than 50% of expenses, rest being labor, administration, amortizations etc…). So now my question: if a base MS 70Kwh is sold at $75K likely without generating profits how can a base M3 60Kwh be sold at $35K with a profit ? The fact that it is a smaller car will decrease parts cost by maybe 5%-10%max. , those parts constituting only 50% of the overall cost of a car. I still believe we got a serious addiction to easy (WS) cash situation here, everyone is telling us this can’t be done at a profit and if a large car maker says it how a small car company sitting in one of the most expensive part of the world can suddenly declare such a low price with such an history of making huge losses. I think nobody really believes this except some here, now the story is nice and all this is good for car electrification so lets not worry about this trivial question too much, money will be found and good looking M3 will be sold in hundred of thousands, I have no doubt of that.

    1. PVH says:

      One way for Tesla to drastically reduce the cost on M3 would be in making it simple and thus very reliable, I did not yet look closely where the cost related to the repairs made under warranty are to be found in 10k form but at looking huge list of repairs Bjorn had made on this MS one could easily imagine how expensive for Tesla this must be. Replacing a part on an yet made car is way more labor intensive than placing this part when car is being build. So cost wise it is a bit like Tesla made the car twice, one time in the factory and a second time in Bjorn’s service center in Norway. I mean this for example must be hugely expensive.

      1. Speculawyer says:

        Electric cars are by their nature much simpler than ICE cars. They have far fewer parts. And they have far FAR fewer moving parts. The parts are subjected to less heat. And there are fewer liquids that can leak

        It is true that Tesla has had some quality issues. The Model S door handles. The motors making a milling sound. And let’s not talk about those Model X doors.

        But the Model 3 won’t have the pop out door handles. The Model 3 won’t have the complex falcon-wing doors. The Model 3 won’t have the auto-opening front doors of the Model X. (It will have an electric motor but presumably they have solved that problem by now.) So most of the features that have caused problems are not present in the Model 3. And it really isn’t introducing anything new AFAIK.

        I’m sure the early models of the Model 3 (like mine hopefully 🙂 ) will have some problems like all early editions of a car. But the Model 3 should have fewer problems than the S & X.

    2. arne-nl says:

      I largely agree.

      Indeed everybody here except you has totally ignored the SG&A elephant in the room. They just add up build costs and if the selling price is higher, then Tesla is ok… Not.

      Now, to counter some of your points…

      JB Straubel has been talking of next-gen technology, meaning Tesla have been working on a new drive train. Logic dictates that they have focused on reducing cost. And increasing reliability, so less warranty expenses.

      What may be counter-intuitive is that R&D expenses are inversely related to the price of the car. The lower the cost, the higher the volume, the more money you must spend to be price-competitive. Incumbent car manufacturers pay R&D from the profits on the previous generation. Tesla is in no position to do this. They can use some of the proceeds of the Model S/X, but mostly they will have to take a mortgage on future sales to fund R&D. Hence the eye-watering losses.

      Furthermore, mass producing cars must be one of the hardest, if not the hardest, activities on this planet. They have suffered quality issues as part of the learning process. They will proceed on the learning curve and have less issues with the Model 3, also because they have signaled that they will focus on simplicity (eg no motorized hatch/door handles). They have recognized that the Model X was an overreach. A hard lesson. Tesla’s execution until now has been very good, but not perfect.

      1. Speculawyer says:

        No, these calculations include SG&A . . . at least mine do. I calculate the estimated cost of a battery and then add in the retail price of an ICE car. The retail price of an ICE car already includes the SG&A.

        And on top of that, remember that Tesla has a much lower ‘S’ (Selling) cost since they don’t pay for advertising and they don’t have to pay a dealer cut.

        (A potential flaw of my estimates though is that I am assuming that the motor, controller, and charger of an EV cost about the same as an ICE, transmission, ignition system, exhaust system, cooling system, etc. on an ICE car. I think that is a pretty fair assumption but I’m open to being shown otherwise.)

        1. TomArt says:

          You don’t need to compare anything to an ICE car when you have the success of the Model S to work with. See my post waaay down below…

    3. Pushmi-Pullyu says:

      PVH says:

      “…it is likely that MS and MX are sold a little below overall cost…”

      What are you basing that on? In its quarterly statements, Tesla has reported gross profits ranging from (as I recall) a low of about 20%, to a high of 27%. Unless you’re suggesting Tesla is committing fraud every quarter, I don’t see how they can possibly be selling cars at a loss.

      Or are you making the mistake — which for some strange reason seems to be common among “financial types” posting about Tesla Motors — of confusing growth expenditures with the unit costs of producing the cars?

      1. ClarksonCote says:

        Gross profits on what though? I’m pretty sure that in the past Tesla’s gross profits have been thanks entirely to selling EV credits, not vehicle sales.

        1. Marshal G says:

          You’re “pretty sure?” Based on what, faux news info? From the Q1 2016 investor letter:

          “Automotive revenue in Q4 was $1.65 billion on a non-GAAP basis, and comprised GAAP Automotive revenue of $1.12 billion plus a net
          increase of $533 million related to cars with a resale value guarantee or collateralized borrowing and subject to lease accounting.”

          and yet:

          “Q4 Automotive gross margin, excluding $8 million of ZEV credit revenue, was 20.9% on a non-GAAP basis and 19.2% on a GAAP
          basis. These margin measures were burdened by $67 million non-GAAP ($51 million GAAP) of unfavorable labor and overhead
          allocations associated with lower than planned Model X production volume, and non-recurring asset impairment charges for obsolete
          painting equipment and Model S components as we transitioned to improved production processes and designs. Excluding these
          items, Q4 Automotive gross margin was 25.0% on a non-GAAP basis and 23.7% on a GAAP basis.”

          1. Marshal G says:

            Oops meant Q4 2015

        2. Pushmi-Pullyu says:

          ClarksonCote said:

          “Gross profits on what though? I’m pretty sure that in the past Tesla’s gross profits have been thanks entirely to selling EV credits, not vehicle sales.”

          Hmmm, it would be informative to see actual figures for Tesla’s income for selling ZEV credits, and compare that to gross income from sales of its cars.

          ClarksonCote, I’ve seen the same assertion as you’re making here in any number of Tesla bashing posts on Seeking Alpha. Which isn’t to suggest you’re a Tesla basher; so far as I recall, you’re not. But it does look like an FUD assertion to me.

      2. PVH says:

        “Tesla has reported gross profits ranging from (as I recall) a low of about 20%, to a high of 27%”.

        True, Tesla each times comes with good gross profits. For 2015, $923M.
        Then right after that good profit things start to be rough. Selling, General & administrative: $922M expense. What is left: $1M profit.
        Now it will be hugely time consuming for an auditor to challenge the cost accounting of a company. Thus see what part of the expenses should be considered as directly in relation with building a car, thus included in the gross income part or not. What matters to him is the bottom line, way a cost is booked, as long as it is booked is not crucial. So unfortunately what matters is the bottom line and which part of that bottom line is due, in the example of Tesla, to fast growth. Never forget that Tesla so far is hanging on for dear life to Wall Street as it never made a profit so if a cost has to be put in R&D or SGA in order to report a good profit margin it will be (legally) done and no auditor will challenge them harshly for doing so.

        1. Pushmi-Pullyu says:

          I’m certainly not going to challenge your assertions here; I’m not a financial type. But I do wonder just where Tesla’s capital investments on growing the company, on building out more production capacity, and building the Gigafactory, come in. If some of that is included in “SG&A”, then it seems improper to me to count that against the profit margin of the cars.

          Tesla has also said that it needs to increase the number of Tesla stores in anticipation of selling the much higher volume Model ≡. Now, I don’t think it really costs Tesla that much to rent or build a few score or even a few hundred stores, and staff them, compared to its gross income from selling its cars. But that would certainly seem to be an SG&A expense that should not be charged against sales of the Models S & X, but rather part of “future growth” investment.

          Surely even “financial types” would agree that the profit margin for selling a product should be figured separately from capital expenditures on increasing a company’s production capacity? At least, I hope so. Some of the online comments from those who appear to me to be financial types seem to have left all common sense behind. (Case in point: Claiming Tesla is “losing money” on every car! Really? Then if Tesla sells fewer cars, it will “lose” less money? ::facepalm::)

          1. Doggydogworld says:

            Capital expenses, aka capex, are spread over many years. A billion spent on a factory may show up as 50m/year for 20 years. This helps match expenses to revenues, a key goal of accounting.

            Operating expenses (e.g. R&D and SG&A), aka opex, are usually counted immediately. It’s simpler and less open to abuse. This penalizes rapid growers like TSLA. Serious investors adjust the numbers to estimate “steady state” profit. For TSLA one might use 50% of 2015 opex plus 30% of 2014 and 20% of 2013. That gives 1.25b instead of 1.64b and cuts 2015’s loss by almost half. A more aggressive adjustment would reduce the loss even more, but IMHO no reasonable adjustment produces a profit.

  20. tosho says:

    So this “information” comes from a GM guy and not from Tesla. Why do you even bother posting such “research”.

    1. Jay Cole says:

      Please re-visit the story details:

      The information is via Tesla’s head of Investor Relations, Jeff Evanson who called into UBS to dispute the “research”/estimates with actual figures.

    2. Bul_gar says:

      tosho from which country are you

  21. Bul_gar says:

    I said that 4 months ago that the base version will be with 55kWh.

    It’s pointless for Tesla to sale M3 60kWh cheaper than Bolt EV. That’s why 35k M3 will be with 50-55kWh and 60kWh version will be $37500.

    Tesla said that M3 will be like Audi A4 in size. The new A4 is 5-6% smaller than Model S.
    The distance between the rear wheels and rear end of M3 is less than on Model S. Tesla will use more of the length on M3 for the battery. M3 will be taller than Model S because will use and taller battery cells. On same area the taller cells will have more energy. If Tesla release 100kWh battery for Model S&X this year I’ll expect M3 biggest version to go above 80kWh and even reach 90kWh. Of course everything depends from the projected weight of M3.

    1. Pushmi-Pullyu says:

      Bul_gar said:

      “M3 will be taller than Model S because will use and taller battery cells.”

      Hmmm, you seem to be stating a lot of pure guesses as if they’re facts.

      I read a claim that the rear seat headroom in the Model ≡ is 1″ shorter than in the Model S. That would be more than enough to account for the slightly taller battery cells. Now, it may be that the highest point of the Model ≡’s roof is higher than the highest point on the Model S. But if so, it has much more to do with body style than the height of the battery cells.

      1. Bul_gar says:

        We don’t know the rear seat height from the floor. That doesn’t matter. The battery cells we care about.

    2. Speculawyer says:

      “It’s pointless for Tesla to sale M3 60kWh cheaper than Bolt EV. That’s why 35k M3 will be with 50-55kWh and 60kWh version will be $37500.”

      I hope you are right that the Model 3 will be 55KW and get 215 miles. That might be the 2×4 to the head of the traditional automakers need to realize that they need to MAKE THEIR EVS AERODYNAMIC!

      GM did a good job with the Volt but the Bolt seems less so. But perhaps they decided that easy of entry/exit was more important.

      1. Pushmi-Pullyu says:

        Rear seat headroom is also important. There have been complaints about that in the Model S, and I doubt the Model ≡ will be an improvement in that area.

        Looks to me like the Bolt will have plenty of headroom in the rear seat. That does come with a penalty on streamlining. But that doesn’t mean GM has made the wrong choice; it just means they made a different choice than Tesla did. The market will determine which is better… or perhaps the market will show that both made a correct choice in offering different things, since different people want different things in a car.

      2. Bul_gar says:

        What do you think for the wheelbase of Model 3?
        http://s32.postimg.org/zbfjbn2d1/model_3_on_top_of_A4.jpg
        Straubel said that M3 will be like Audi A4 in size.
        Audi A4 is 4,7 meters long, Model S is 4,978m(6% difference). The wheelbase of A4 is 5% shorter than in Model S. I expect M3 to be 1-3 inches shorter than A4 but to have same wheelbase.
        Speculations are for bigger cells 20700 in size – 8% taller and 11% wider than 18650. On same area the battery pack with taller cells will have more kWh, but between the thicker cells has more empty space. In the pack with bigger batteries will have less connections(because smaller number of cells) or less weight of non cells materials. I expect Tesla to be able to fit 90kWh battery pack with 20700 cells in the wheelbase of Audi A4 or Model 3, but they not gonna do it till some real competitor on the market in end of 2018 or 2019.

  22. Alex says:

    Less then a Bolt or a Leaf 2. I said it already the
    GM Bolt has 208 miles EPA with drag c. of 0,31
    Model 3 has 215 miles EPA with drag coefficient of 0,21
    Only do some calculation and you will get around 55 kWh for the Model 3. Bolt has a frontal aero of 25,8 sq ft, Leaf 24,5, the Model 3 less.
    The IDS Concept has around 239 miles EPA. If the Model 3 would have 60 kWh, Tesla would reach at least 230 miles and not 215 with this excellent drag and small .
    It sounds crazy, but GM you get more kWh for your money :-).

    1. tosho says:

      Not Really. For the 2500 USD you pay more for the BOLT you could buy a lot more than 5kW.

      1. Pete says:

        Why i should not get 2500 – 4000 dealer discount. So i get 2-3 years earlier 60 kWh cheaper.

  23. Dave Alon says:

    Analyst, that’s the name of a guy who spends all day speculating about a product he really does not have any accurate info on. The ENGINEER guy from GM making FINANCIAL guesses so obviously biased toward their own shitty product. More GM insecurity and some greedy banker trying to have his 30 seconds of fame. Scale, how’s 400’000 per year vs 30’000 ? Too many wrong statements to have any credibility whatsoever. I’m not interested in the low end battery anyway. I’d like to know if they intend on having more than 500 km range as an option or not considering the Model S will surpass 600 km when they release the 100D.

  24. EV says:

    It will be interesing how many cancellations Tesla will get when it comes out the base Model is not specially and planty of new cheaper models comes out like
    60 kWh Bolt
    40 kWh Zoe
    45 kWh – 50 kWh Mitsubishi eX
    60 kWh Hyundai SUV
    40 – 60 kWh Leaf
    At end of the day only the price counts in mass market. And if other starts at 28k $ or Zoe at 20k$ (with double range as today) many will rethink their reservation.

    1. tosho says:

      20k$ for a ZOE? The ZOE costs around 35k EUR in Europe at the moment. This is much more than Teslas 35k USD. And add import taxes to that if you want it in the US. And the ZOE is a tiny city car ….

      1. Alex says:

        You get the Zoe for 22k – 23k € in Uk and Norway, in Germany 17k € +battery rental and in French more because Renault taps the incentives up to 10.000 €. They could lower the price and easy offer 40 kWh next year without higher price, i have a friend working for Renault.

        1. arne-nl says:

          I see what you did there 😉

          Let’s not compare the 35k pre-incentive price of the Model 3 to the post-incentive price of the Zoe.

          In The Netherlands the Zoe R240 (without fast charge) starts at 21k euros + battery rent (100 euros /month for an average driver).

          1. Alex says:

            Thats because Renault grabs the incentives in Netherlands. In Germany you can buy a new Zoe for 16k € without any incentives and the dealer nevertheless earns money.

            1. arne-nl says:

              From the renualt.de, the price starts at 21.500 euros. And then you get a car without battery. The rental adds ~100 euros per month for an average driver.

                1. arne-nl says:

                  Once again, that is the price after 5000 euros elektrobonus. So my point remains: the Zoe is 21,500 in Germany, plus battery rental.

              1. EV says:

                I am also from Germany, for 21k € you can also buy the Zoe WITH battery in Germany, 16,5k € without. And thats a price Renault produce only 20.000/year units with old battery from 2013, with new next gen LG 2017 batteries and 100.000 units a year you will get a 40 kWh Zoe for 18k € next in 1-2 years. Better value for your money than any other company will offer because Zoe is cheap made small EV.

                1. arne-nl says:

                  See my reply above to Alex.

                  1. EV says:

                    See at autoscout24…
                    http://ww3.autoscout24.de/classified/282821023?asrc=st|as
                    At 16k € Renault still earns money…thats wihtout incentives! Governmental incentives comes later and Renault will cancel the “bonus” to earn more money like in Netherlands.

                    1. arne-nl says:

                      You should read the fine print. You know, car salesmen.

                      * Angebotspreis für einen Renault ZOE Life inklusive 5.000,- € Elektrobonus ohne Antriebsbatterie. Fahrzeug wird nur verkauft bei gleichzeitigem Abschluss eines Mietvertrags für die Antriebsbatterie mit der Renault Bank.

    2. arne-nl says:

      “At end of the day only the price counts in mass market”

      Oh no, most definitely not. We would all be driving Trabant-like vehicles, wouldn’t we?

      Options, comfort, performance, styling, brand image, everything counts. The decision of buying a car is mostly based on emotion (as with every other buying decision). You buy the car that you want to be seen in, that aligns with your identity. And if that means sacrificing some range/performance/luxury/practicality, or buying second hand, so be it.

      So even if there are competitors available that look better on paper, then remember, people do not base their buying decisions on a spreadsheet.

      1. Alex says:

        Look at the EV number one in China, Panda EV.

        1. arne-nl says:

          China is not Europe or USA.

          1. mr. M says:

            The Panda EV is not sold in europe. The Zoe is the Panda EV of europe. The Zoe is the cheapest BEV and the Zoe is the most sold BEV.

            “At end of the day only the price counts in mass market”

            1. arne-nl says:

              In the USA the Model S is sold in higher numbers than the Nissan LEAF or Ford Focus Electric. Why? Because “only the price counts”?

              The price is one of the factors, for all consumers, not the only factor.

      2. TomArt says:

        Exactly. That’s the biggest issue that makes me cringe at political leaders who insist on putting their full faith in the “market” rather than on regulations, because they insist, despite the entirety of human history, that markets are logical and self-regulating. No. They are neither. They never have been (read history). And, they never will be as long as we humans are involved.

        1. Pushmi-Pullyu says:

          Well said, sir.

          If markets were “self regulating” we wouldn’t need laws prohibiting monopolies — hopefully everyone has read about the Standard Oil monopoly in school? — nor would we need the FDA, the EPA, nor automobile crash tests.

          We can also see how the automobile market attempts to be “self regulating” by auto dealer associations trying to use State laws to prohibit Tesla from selling its cars from showrooms.

          What every country needs is a competitive market. Not a “free” market. Sometimes controls are necessary to ensure all companies have an equal opportunity to compete.

  25. Chris says:

    Look, the way I see it.. is like this. With the BMW i3, the design decision was based solely around the weight. If the weight can be reduced, we can reduce our expenditure on an expensive, but best-in-class NCM chemistry pack – to no more than 23kWh, and software limit that pack to 18.8KkWh in everyday customer usage.

    Now, BMW was able to get away with such low battery figures, PURELY, because they limited weight of the i3 BEV to little more than 1200 KG ! Where they messed up was in the CD figure.

    Now the Tesla Model 3 is in the best position of all currently announced 200+ mile range BEV’s. They have a very low CD, and they already have committed to no less than 215 miles range on the basic model, and Musk stated they hope to exceed that.

    The Bolt’s 60kWh pack will provide less EPA and real-world range than a 55kWh Tesla Model 3 due to the M3’s greater aero. It will count for a lot.

    I do expect, however, for the Bolt EV to shine solely in City use. But Model 3 looks set to be a better choice for those who require more of a luxury car and for a mix of uses including highway driving.

    1. arne-nl says:

      And to expand on that, the EPA average to determine range is a leftover from the ICE age.

      EPA should change the range estimation algorithm to be based mainly on highway consumption since that is where you drive when covering large distances. Afaik there are no cities that span 300 km.

      1. Priusmaniac says:

        I agree, the range is important when you go on a long trip which tend to be at freeway speed where aerodynamic drag account for two third of the energy consumption. The low 0.21 Cd of the Model 3 will make more effect than low weight in those circumstances. In particular I expect the Europeans to be really surprised by the 80 mph freeway range of the Model 3. Even the still higher speed autobahn range in Germany will likely be much better.

        We also don’t know the exact weight of the Model 3, perhaps it will be low as well and we may also have something new on friction reduction in the bearings. Oil free bearings with graphene, magnetic bearings or something else. Progress is still possible there too.

  26. Terawatt says:

    Funny beasts, those financial analysts!

    It’s interesting of course to try and analyze the costs of making a product. But you have to be a special kind of person to conclude, when you find it costs significantly more to make than the asking price, that the plan is to sell the product at a loss! Might it be that Tesla knows something the analyst doesn’t? Is there a chance that the result is paradoxical because of an error in the analysis?

    The analyst must necessarily have much less information than Tesla. At best, the analysis tells us that Tesla must achieve significant cost reductions in order to make a profit in Model 3. It certainly doesn’t tell us whether they can do that.

    1. TomArt says:

      Excellent points.

    2. PVH says:

      And why after all those years would Tesla feel all of a sudden the need to make a profit ??

      1. JWF says:

        Because the vast majority of business decisions are made using a “Return On Investment” basis. The “profits” reinvested today look to have deeply impressive returns within a decade. For all the media complaints about how Telsa does not deliver on the promised date, it is overlooked that the promised date is an impressively short time in the auto industry.

      2. Pushmi-Pullyu says:

        Hmmmm, perhaps because at some point Tesla will have to pay off all the loans it’s racking up in order to grow the company?

        This is the same business strategy that Amazon.com used. And we have seen similar endless complaints from “financial types” about both companies, which they incorrectly describe as being “not profitable”.

        Funny thing, since Amazon.com is now the world’s largest retailer, and (so far as I know) it now has a positive cash flow, those voices crying it was “not a profitable company” have fallen silent.

        Of course, just because Amazon.com has succeeded with that business strategy doesn’t mean another company can. But it certainly does become annoying to keep reading all those posts that firmly ignore why Tesla is spending more on capital investments than it’s making in profits, and keep incorrectly asserting that Tesla isn’t making a profit on selling cars.

  27. zzzzzzzzzz says:

    $35k version can be 40 kWh without supercharger access. Or whatever. We already seen it. You will be always able to say that it fulfilled what was promised 😉
    Anything more usable, you will need to pay extra for it.

    1. Priusmaniac says:

      The SparkEV April 27, 2016 12:59 calculation in the comments above is likely very close to the reality, so, with margin for aging and so on, 55 KWh is probably right on. 40 KWh is too far off and since it is said bellow 60 KWh, there is not so much choice left.

      On the larger pack it is not so easy to guess the KWh. You can take example of the Model S 70 versus 90 and conclude that the ratio will be identical so that would increase the 55 value to 70 but it is possible that the smaller overall size would mean a lower ratio and thus give something like 65. At contrary, if we account for one more year of battery improvement at an 8% rate and starting from the around the corner Model S 100 value, we get 108 versus 70 which would make a new ratio result of 85. That would mean a Model 3 with 85 KWh and 330 miles (528 Km) of range.

      So there is way more swing possibility on the large pack between 65 KWh and 85 KWh. That is really where the suspense will be.

      1. Pushmi-Pullyu says:

        I seriously doubt that Tesla will offer an “upgraded” battery pack with only 10 kWh (or less) bigger capacity. The range difference wouldn’t be that great.

        I’m guessing that the base model will have ~55 kWh and the upgrade will be about 70-75 kWh.

    2. Get Real says:

      Looks like serial Tesla/Musk hater zzzzzz thinks he has a crystal ball. What he/she doesn’t have is a good grip of physics.

      It would be impossible for the base M3 to have its minimum range of 215 miles with a 40kwh pack plain and simple.

      But they will have a base model at 35k and it will have 215 miles of range.

      1. zzzzzzzzzz says:

        Sure the Prohet M. told 215 miles so it is carved in stone and you should not doubt Prohet words, he is always right and it doesn’t matter how many years or decades it will take for the prophecy to come true 😉

        1. Pushmi-Pullyu says:

          Hmmm, on the one hand we have Elon Musk making a material statement about a highly anticipated future Tesla product now being actively developed. On the other hand, we have a serial emitter of anti-Tesla FUD cowflop.

          Gosh, who to believe? What a dilemma… NOT!

  28. georges says:

    “The first issue taken with the report was that the Model 3 is actually only partially aluminum, not all-aluminum to the extent of the Model S,”

    What the heck is Tesla mean with that statement? The car is all aluminum? …..

    or the car is all steel??

    1. mxs says:

      Read again … part of the car is Alu … obviously nobody will tell you at this moment which parts exactly are these.

      1. georges says:

        @mxs
        agreed. electrek said that also.

        Electrek article quote:

        “During the call, Evanson also said that the Model 3 will be partially made of aluminum, something Tesla officials said in the past.”

        So this Barissa guy assumed the car was all aluminum in his analysis?

  29. koz says:

    When is the EPA, media, and public going to wake up to the understanding that for a 200+ range EV combined city/hwy range ratings are waste of time. What is more important to a Model S 90D driver, 285 miles combined rated range or 300+ hwy range? What I care about as and EV driver, Volt and S, is what my rated consumption is for city and separately what is is for hwy. What I care about when evaluating a BEV for purchase that is more than a city runabout is what the highway range is.

    1. mxs says:

      Sorry to break it to you, but you are the vast minority.

      List one reason why this should matter? You perhaps believe that the future in long distance travel by car on hwy???

      1. Ambulator says:

        I think he’s in the majority.

        If I’m driving 100 miles it mostly won’t be city driving.

      2. mr. M says:

        I also think that most of long range driving will occur on highways. I never spend more than 50-60 miles driving through town in one day.

        Maybe postal services are different. But they are an exception from the rule.

      3. Pushmi-Pullyu says:

        mxs said:

        “Sorry to break it to you, but you are the vast minority.”

        No… that would be you.

        For a BEV with a real-world range of well over 100 miles, the maximum range is of primary importance only with long distance travel. For everyday driving, most drivers won’t need to worry about range.

        In fact, with such a car, the only time you should charge your BEV to a nominal 100% is for long distance driving. There’s no good reason to charge to greater than 80% on an everyday basis. Using an everyday maximum charge of 80% helps preserve battery life.

    2. TomArt says:

      Normally, I would agree with you, but most people don’t realize how efficient cars with traction batteries are in urban environments because of:
      1) no engine idle; and
      2) regenerative braking.

      That’s why, with a vast majority of hybrids, their city EPA numbers are higher than their hwy EPA numbers. With pure ICE cars, the city mileage is what killed them because the ICE is running all the time, often needlessly, and there is no way to recoup the energy lost in friction-based deceleration.

      Putting the combined mileage is what people are used to, so that’s what you do, at first.

      Electric cars (excluding climate control) will be able to go much farther in urban driving, unless you like to treat every traffic light as a drag strip.

      1. Speculawyer says:

        No idle and regen certainly are nice help. But the main reason is that electric motors are just much more efficient (80% to 90%) than gas ICE (20% to 25%).

  30. leafowner says:

    I still don’t see how it will be “at least 215 miles of range” and be much under 60kw.

    If the costs are really less than $190/kw today — just go ahead and add an extra 25kw to my M# right now!

    1. TomArt says:

      There’ll be an upgrade for that.

  31. georges says:

    “Jon estimates TSLA’s pack costs at $260/kWh and GM’s at $215/kWh (due to GM sourcing the cell at-cost from LG).”

    How does this jive with the 145$/kwh cost that GM was quoting for cells???

    Are we to assume that the pack costs make up the difference?

    If so then 215/145=1.48

    pretty hard to believe the pack adds 50% to the cell costs.

    1. mr. M says:

      Actually 50% is pretty low, i recently saw a slide that in 2013 the pack was half of the cost.

      1. mr. M says:

        *half of the total cost. So the pack was another 100% of cell cost.

        1. georges says:

          @mr. M,

          I found a link that says pack costs add 50% to the cell cost.
          http://www.thedetroitbureau.com/2015/11/gm-plugging-in-a-potential-game-changer/

          so if Tesla is claiming 190$ for the packs now that translates to 127$/kwh at the cell level compared to GM’s 145$/kwh

    2. Pushmi-Pullyu says:

      georges

      “[quote]Jon estimates TSLA’s pack costs at $260/kWh and GM’s at $215/kWh (due to GM sourcing the cell at-cost from LG).[unquote]

      “How does this jive with the 145$/kwh cost that GM was quoting for cells???

      “Are we to assume that the pack costs make up the difference?”

      Keep in mind that LG Electronics & LG Chem are providing the entire EV powertrain for the Bolt. When the $145/kWh cell price was leaked, there was immediate speculation that this might be at or near-cost by LG, a “sweetheart deal” LG may have offered in return for getting the contract for the entire powertrain, not just the battery pack.

      Given that LG complained about the leak, stating that most or all of their other customers were paying far more, it seems likely that price is indeed at-cost or near to it.

  32. TomArt says:

    Well, I’ve posted it elsewhere, and I guess I’ll repeat it here, because it bears repeating:

    We need to start with what Tesla has achieved:

    Model S70 = $70k
    1) 25% profit margin per unit
    2) 70kWh pack – big car needs more energy
    3) 230 miles EPA
    4) large rims (19″ standard)
    5) bells and whistles like motorized door handles and side mirrors are standard.
    6) big car has more material
    7) all-aluminum body
    8) etc., etc.

    The Model 3 = $35k
    1) target only 15% profit margin per unit
    2) 55kWh pack – smaller car needs less eneryg
    3) 215 miles EPA (almost the same)
    4) smaller rims (probably only 16″ or 17″ standard)
    5) no motorized bells and whistles standard
    6) smaller car, less material
    7) more steel, less aluminum
    8) agnostic dashboard and central instrument stack
    9) designed to be more efficiently manufactured
    10) etc., etc.

    When you do the comparison, with Tesla’s own goals for the Model 3, it does not seem so unreasonable to me that they will be just fine once production ramps up, just like the Model S.

    This is particularly poignant when you consider the fact that, so far, there is no tech nor physical design feature that goes beyond what the Model S already has – no Falcon doors, for example – and things like panoramic roofs have been part of Model S production from the start.

    My concern is not IF Tesla Motors will be able to produce the Model 3, with the above performance and profit targets and features, for $35k. What concerns me is what level of quality control issues are we going to be facing and how long they persist as manufacturing ramps.

    1. TomArt says:

      Oh, and “more steel, less aluminum” means lower part costs, as well as lower labor and manufacturing costs since it’s simpler, according to other analyses that have come out.

      1. TomArt says:

        Also, even something like the hood ornament which, on the Model S, is multiple pieces of trim and the Tesla “T” separately applied. The Model ≡ just has a decal/paint job.

    2. PVH says:

      Profit margin for unit should not be taken into account when taking North American car makers into consideration. Your are comparing apples to oranges. If you look at Ford Motor SEC filings for example and have a look at their statement of operations you do not see a line “research and develoment” appearing after the gross income like in Tesla’s. Why, does Ford do no R&D at all, yes they do but include it in their “cost of good sold” (cogs). If you do that with Tesla the gross margin and thus the profit margin per unit is hugely reduced. You have a huge flexibility in your reportings to SEC, this is why people here discuss for years if Tesla is making profits or not, your SEC filings is a bit like the Coran, everybody will find what he wants to find in it.

      1. TomArt says:

        Thank you for the clarification, but that’s not the point I’m trying to make. People say it can’t be done, but the success, popularity and nearly 4 years of continually ramped-up production and improved QC of the Model S stands in clear defiance of that popular assertion.

        So, the only realistic basis upon which to determine whether Musk’s promises for the Model 3 are reasonable is the Model S, as it is today. So, I compared the price and standard features of the base Model S70 to that of the base Model ≡55. You need to take everything about the vehicles into account, from the targeted profit margin (as defined by Musk) to the differences in design, size, standard vs. optional features, etc.

        Based on that comparison, I say that Musk’s promises are reasonable, and that the Model ≡ will come to fruition, as promised, without an inordinate amount of delay (if any) and probably with some warranty work.

        However, in terms of the company, as a whole, making a profit, that’s another matter, which is what I think you were talking about. It seems reasonable to conclude from the data I’ve seen that they don’t sell enough vehicles over any given period of time in order to cover all varieties of expenses. The Model S is the only product being sold in enough volume to make any money right now, and it’ll probably take a year of production ramp at least before Model X sales start doing the same (never mind all that warranty work).

        I don’t know much about Tesla Energy, so that’s another potential money-maker, if it takes off as well as the cars have.

        It may very easily take until 2020 or maybe 2022 for volume sales to overtake warranty work + R&D + new stores + new service centers + new superchargers + new factories + expanded manufacturing capacities + fixed costs.

        And, I suppose there is no guarantee that such a time may ever come. There are a lot of variables, and they all will change dramatically into the next decade.

        1. TomArt says:

          For example, they won’t be building service centers and stores forever – there will be a saturation point at which it won’t make sense to keep going.

          For another example, the SC network will probably continue to be built out for many years – however, an international standard could come out of this CCS group that Tesla recently rejoined, in which money and access for a global charging network may absorb the existing SC network, and a whole new financing system may end up being in place by, say, 2020, where Tesla Motors would no longer shoulder anywhere near the entire burden of buildout and maintenance.

          Profitability in 5 years is not an unreasonable expectation, given what we know now.

          1. PVH says:

            “Profitability in 5 years is not an unreasonable expectation”.

            I agree.

    3. JWF says:

      @TomArt “My concern is not IF Tesla Motors will be able to produce the Model 3, with the above performance and profit targets and features, for $35k. What concerns me is what level of quality control issues are we going to be facing and how long they persist as manufacturing ramps.”

      Certainly some QA issues are expected. The significantly more important aspect has always been what issues are addressed head on by the automaker versus what issues are slow rolled or covered up by the automaker. This is where Tesla is so vastly different. Tesla issues seem to get immediate engineering attention starting at the CEO. Most other makers (e.g. VW) handle issues as customer PR problems. Transient QA issues are quite different than permanent QA issues never resolved technically. Airbags are one example of the later.

    4. Pushmi-Pullyu says:

      TomArt said:

      …so far, there is no tech nor physical design feature [in the Model ≡] that goes beyond what the Model S already has – no Falcon doors, for example…”

      Well, the Model S has no HUD. Nor any particular need for one, since it has a perfectly fine instrument panel for the driver to look at.

      This looks like another “bridge too far” to me. Of course, I’m hoping to be proven wrong on this point… but unfortunately I was all too right about the falcon wing doors proving to be troublesome in practice.

      Really, I don’t see why it’s so important to have a “left/right agnostic” instrument panel. Just make the thing as a separate unit, connected to the car’s computer via a single wire bundle in the middle of the dashboard. Then you can move the entire instrument panel either left or right, as needed, and anchor it with a few screws. Wouldn’t that be less expensive and more problem-free than a HUD display?

      I think most drivers would prefer even a cheap, low-tech instrument panel to having to learn to look at a centrally mounted monitor out of the corner of your eye. And for Autopilot, I can’t see that working at all. You may be able to see a large MPH number displayed out of the corner of your eye, but since the Model ≡ is gonna be equipped with Autopilot, it’s going to be far too much to expect a driver to see the graphic display for lane-keeping and the presence of other vehicles around the car out of the corner of his eye!

      1. TomArt says:

        Yes, I forgot to put in the exception of the HUD – however, if Tesla remains consistent, I’ll bet that it’ll be an option in the S and X before production starts on the 3.

        I’m not saying that the central stack is a good idea, but it does seem to be a cost-cutting measure common to many automakers, particularly for their compact models.

  33. Trollnonymous says:

    The Model ≡ needs to be KISS.

  34. Natty Dred says:

    Lots of good discussion here. I have a feeling an important variable for profitability is what sort of volume M3 will see and how soon. The M3 reservations give them data for a better wager on the target volume build out.

    HUD reduces mechanical/material complexity, I think.

    Eliminating ICE means they don’t have much in each car apart from materials and battery. I can believe the guesstimate of $5-7K sans drive train, from someone in the business, above.

    If they can build out to a high enough manufacturing volume quickly enough, while maintaining the prime focus on managing per unit build cost, they could be hugely profitable.