Tesla Model 3 shows bigger profit in latest cost breakdown


Tesla Model 3 all-wheel drive Performance rolls off a new assembly line in a temporary structure

Tesla Model 3 all-wheel drive Performance rolls off a new assembly line in a temporary structure

Tesla isn't the only one with a lot riding on the financial success of the Model 3. CEO Elon Musk has called ramping up production of the Model 3 a "bet the company" decision, and said that if the company couldn't build 5,000 of the cars a week, Tesla would "die."

Thousands of individual and institutional shareholders stand to make a fortune or lose their shirts on the outcome, along with tens of thousands of employees. Hundreds of thousands of consumers stand either to land on the hook to buy a new luxury car or to lose their deposits.

Now, a new report from Munro & Associates in Michigan shows that Tesla could be making a profit of up to 30 percent on the Model 3.

Monroe is the company that initially said they didn't see how the Model 3 could succeed after it found problems with fit and finish in the car it acquired to tear down, including fit problems with major body panels.

The report costs $100,000, and owner Sandy Munro isn't saying whether the 30-percent profit margin would apply to the base version of the Model 3 or only to the higher-end models that Tesla sells today. Munro appeared on Autoline and estimated the profit potential for the Model 3.

READ THIS: First Tesla Model 3 Performance AWD built; Musk claims company was "sabotaged"

An earlier report by a German firm, which Musk on Twitter called "the best analysis of the Model 3 to date," pegged the cost of parts and materials in the Model 3 at $28,000.

Seemingly coincidentally, Tesla last week dropped the base $35,000 version of the car from the company's order page. In a way, the change may be just a reflection of reality, since Tesla doesn't build such a car yet so reservation holders can't order one. The company still references the $35,000 Model 3 on its site in the car's press kit.

Commenters speculated that it meant Tesla wouldn't offer for sale a Model 3 for $35,000 but a spokeswoman told Ars Technica, which noted the low-cost Model 3's disappearance, the company still plans for the low-cost version.

"It's a mistake to position this as a change in Tesla's plan because it's not," the spokeswoman told Ars Technica in a phone interview. "We're just focusing on the options that are available now for our customers so that it's more clear. There's nothing else to it." The company still "plans to introduce the $35,000 version in the future," she said.

Musk has said the company needs three to six months of full production of higher-margin Model 3s before it can afford to produce the base version. That could mean the company will begin producing the cars late this year or early next.

In 2012, Tesla dropped the base version of its Model S, which was slated to have a 40-kwh battery, and made an official announcement that it would transfer the orders of all those customers to 60-kwh cars, because there weren't enough orders for the base model.

 
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