Tesla’s Cheap Model 3 Will Lose Money For The Automaker: Analyst

Tesla’s Cheap Model 3 Will Lose Money For The Automaker: Analyst

Tesla’s production ramp-up of the Model 3 has started with more expensive models, while the much-anticipated $US35,000 ($47,768) base trim has yet to roll out of the company’s California factory. But when it does, investment bank UBS claims Tesla will lose nearly $US6,000 ($8,189) for each car sold.

In a series of notes issued this week, the bank highlighted what it found in a teardown of the Model 3 and “concluded that Tesla would not be able to make any money from the $US35,000 ($47,768) base trim of the electric sedan,” reports Consumer Affairs.

The firm’s research and teardown of the Model 3 revealed over 30 per cent profitability. UBS’ report claims that Tesla would be losing about $US5,900 ($8,052) for every $US35,000 ($47,768) Standard trim Model 3 it sells.

“Beyond the build quality issues, the serviceability of the Tesla Model 3 comes into question as well,” said UBS. “Many aspects of the vehicle are inaccessible to even experienced mechanics and the containment of the battery pack makes fixes complex and expensive.”

“In general, the car has fewer components, which are often more advanced than previous generations, but each component is more complex, expensive, and harder to service or replace,” UBS said.

A Tesla spokesperson had no comment when reached Thursday by Jalopnik.

The conclusion’s markedly different from the findings of manufacturing expert Sandy Munro, who deemed the Model 3 solidly profitable. Munro believes the Model 3 has a profit margin of about 30 per cent, but that was based on an optioned trim that cost approximately $US55,000 ($75,064).

When we asked Munro’s company, Munro & Associates, if the 30 per cent margin could be used to extrapolate what the margins are on the cheaper Tesla Model 3, the answer is: we may have to wait until the car’s available.

The problem with trying to figure out what the lower trim model costs, is: What does it have?” Munro’s James Hadley told us.

Tesla has said that deliveries of the $US35,000 ($47,768) Model 3 will begin early 2019.