Tesla Model 3 Profitability: Will Elon Lose His Shirt over This or Will They Crush the Competition?

// Looking to Buy a Tesla? Get $1,000 Off + Free Supercharging Use our referral code and instantly get a discount plus free supercharging on your new Model S or X. *** Get Started https://teslanomics.co/td *** // Get $1,000 Off Your New Tesla - https://teslanomics.co/td Use our referral code (limited qty) and receive $1,000 off your new Tesla Model S or X plus free supercharging. Get them while they last! Recently, we explored the cost of purchasing and owning a Tesla from the consumer side. This week, we’re looking at Tesla’s costs and how it effects their bottom line – specifically, as it relates to the Model 3. In Q1, Tesla improved their profitability in the automotive sector by 27%. Question is, can they do the same with the Model 3? According to non-believers, like Colin Langan from UBS, no. Langan is constantly throwing shade Tesla, underestimating their stock price and overestimating their upgrade costs. However, out of his short-sighted and wrongful predictions, came the discussion of the profitability of the Model 3. Using data from an anonymous source as well as my own calculations, I was able to estimate profitability potential based on what Tesla needs to get their battery costs per kwh down to. Under conventional wisdom, to determine the profitability of a vehicle, you take the sales price of the car and compare that to the cost of production – which is about 40%. With electric vehicles, you also have to consider the cost of the battery – which is about 50% of overall production. Thus, we can reverse engineer these numbers to predict the Model 3’s profitability based on what the cost per kwh needs to be. I've charted out and visualized various estimates of these numbers to determine the sweet spots of where Tesla needs to be in terms of cost per kwh. For the 55 kwh pack, it’s around $130. For the 77 kwh pack, it’s about $120. Again, these are estimates. However, as you can see from the data, Tesla should be in pretty good shape to profit from the Model 3, if they hit these cost per kwh benchmarks. It’s important to note, and I will provide more detail via the link below, as the base sale goes down, the production cost remains relatively constant. It is the cost per kwh that effects the overall production cost percentage - and in-turn profitability. Looking at the data in this way will help us better understand profitability potential as more information on kwh pricing becomes available. It will also help us understand what that means for the Model 3 and Tesla as a company. While we know what they need to get the cost per kwh down to – approximately $130 - the question is, will they be able to do so? They currently have their first gigafactory with some parts of it online. They also have a second factory in Buffalo, NY. Additionally, Tesla is going to announce 2 – 4 gigafactories this year. The reason I mention the gigafactories is scale. The more factories there are, the more Teslas they can build - thus, the more they can drop the price. And, once they get the price below $130 per kwh, they're going to be making some serious cash. You can dive further into the data here: https://docs.google.com/spreadsheets/d/1UVsupw56gYSNhvWLOlqPzu1rOTgE9-aN4LJ6C9eSp34/edit#gid=2025779241 As always, for the latest Tesla news, visit us at Teslanomics.co Teslanomics.co is on social and Patreon, too. Join the conversation: P: https://teslanomics.co/patreon FB: https://fb.com/teslanomics T: https://twitter.com/teslanomicsco Music provided by: Epidemic Sound

TARGET AD 2
2017/05/25 Teslanomics by Ben Sullins   Share on Facebook

RELATED VIDEOS

Tesla Batteries Last Forever (Basically)
Play Video

Tesla Batteries Last Forever (Basically)

2017/07/25
Former General Motors Vice Chair: I Think Tesla Is Doomed | CNBC
Play Video

Former General Motors Vice Chair: I Think Tesla Is Doomed | CNBC

2017/04/12
What is the TRUE Cost of Owning a Tesla Model 3? We Compare to the Honda Civic & BMW 3 Series
Play Video

What is the TRUE Cost of Owning a Tesla Model 3? We Compare to the Honda Civic & BMW 3 Series

2017/11/17
A Tesla Problem No One is Talking About!
Play Video

A Tesla Problem No One is Talking About!

2017/04/30
Here
Play Video

Here's Why the Tesla Model 3 Is the Coolest Car of 2017

2017/11/06
Scott Galloway: The Next $300 Billion Company
Play Video

Scott Galloway: The Next $300 Billion Company

2016/10/20
Tesla Model 3 (New) vs Model S (Used) Are Autopilot 2.0, Self Driving, and Ludicrous Mode Worth It?
Play Video

Tesla Model 3 (New) vs Model S (Used) Are Autopilot 2.0, Self Driving, and Ludicrous Mode Worth It?

2017/01/23
Europe Plans Own Battery Gigafactories, Challenging Tesla
Play Video

Europe Plans Own Battery Gigafactories, Challenging Tesla

2017/05/22
Model 3 Leaked Employee Handout!
Play Video

Model 3 Leaked Employee Handout!

2017/05/24
What is the Lifespan of a Tesla Battery and How Long Will it Last?
Play Video

What is the Lifespan of a Tesla Battery and How Long Will it Last?

2017/04/12
Tesla Time News - Orange You Glad It
Play Video

Tesla Time News - Orange You Glad It's Tesla Time News?

2018/01/23
My Only Stinking Problem With Model X. Kim Unplugged!
Play Video

My Only Stinking Problem With Model X. Kim Unplugged!

2018/01/23
Roadster Designer and Media Bashing Tesla + Q&A for Nov 27th, 2017 - Teslanomics LIVE!
Play Video

Roadster Designer and Media Bashing Tesla + Q&A for Nov 27th, 2017 - Teslanomics LIVE!

2017/11/26
Is the Tesla Model 3 Worth It?
Play Video

Is the Tesla Model 3 Worth It?

2018/01/06
My Tesla Problems
Play Video

My Tesla Problems

2017/05/20
Here
Play Video

Here's Why the Tesla Model X Is an Awful Car

2016/12/12
Will Lithium Shortage Kill The EV Industry?
Play Video

Will Lithium Shortage Kill The EV Industry?

2017/07/29
Nürburgring & Tesla Model 3 | Fully Charged News
Play Video

Nürburgring & Tesla Model 3 | Fully Charged News

2017/05/28
Tesla Model 3 Model Review | Edmunds
Play Video

Tesla Model 3 Model Review | Edmunds

2018/01/12
Driving A Tesla For The First Time
Play Video

Driving A Tesla For The First Time

2017/05/25
Cheaper than Tesla Model 3? Top 10 Alternative Electric Cars with Good Battery Range
Play Video

Cheaper than Tesla Model 3? Top 10 Alternative Electric Cars with Good Battery Range

2016/11/29
Taking My $60,000 Tesla Model 3 to CarMax - Guess How Much They Offered?
Play Video

Taking My $60,000 Tesla Model 3 to CarMax - Guess How Much They Offered?

2018/01/19
Tesla auto workers
Play Video

Tesla auto workers' safety in question

2017/05/25
MY NEW TESLA MODEL 3!!! Her name is Tez
Play Video

MY NEW TESLA MODEL 3!!! Her name is Tez

2018/01/18
Will the Tesla Model 3 Bring the Supercharger Apocalypse?
Play Video

Will the Tesla Model 3 Bring the Supercharger Apocalypse?

2017/04/17
Tesla Time News - The Solar Roof Sells Out!
Play Video

Tesla Time News - The Solar Roof Sells Out!

2017/05/30
Tesla Model 3 Will Cost Around $50K [Updated] Almost 10K Reservation Holder Surveyed
Play Video

Tesla Model 3 Will Cost Around $50K [Updated] Almost 10K Reservation Holder Surveyed

2017/06/05
TESLA MODEL 3 PREDICTION - 83K Delivered in 2017 But Will It Be Enough to Please Investors?
Play Video

TESLA MODEL 3 PREDICTION - 83K Delivered in 2017 But Will It Be Enough to Please Investors?

2017/06/15
200K Model 3
Play Video

200K Model 3's in 2018?!! My Estimate for Tesla's Delivery Ramp

2018/01/11
Tesla Model 3 | Fully Charged
Play Video

Tesla Model 3 | Fully Charged

2016/05/02
The Journey to a Tesla Model 3
Play Video

The Journey to a Tesla Model 3

2018/01/11
Apple, Google HQ & Tesla Model 3! #V4
Play Video

Apple, Google HQ & Tesla Model 3! #V4

2018/01/22
Tesla Model 3
Play Video

Tesla Model 3's Biggest Flaw Solved by Navdy? My Review of Navdy Heads Up Display

2017/05/24
I Gave my Tesla a Facelift!!! Update to 2013 Model S Front Fascia
Play Video

I Gave my Tesla a Facelift!!! Update to 2013 Model S Front Fascia

2018/01/09
Why We Don
Play Video

Why We Don't Want a $60,000 Model 3!

2018/01/08
Tesla Model 3 - Service Outcome
Play Video

Tesla Model 3 - Service Outcome

2018/01/20
Tesla Model 3 Hidden Details
Play Video

Tesla Model 3 Hidden Details

2016/04/03
The part of Model 3 that actually IS the next version of Tesla (right now...)
Play Video

The part of Model 3 that actually IS the next version of Tesla (right now...)

2017/05/25
Tesla Time News - Fisker
Play Video

Tesla Time News - Fisker's 1 Minute/500 Mile Battery

2017/11/28
Model 3 Production Up, Battery Breakthrough,  A Dying Man’s Wish -  TEN Future Transportation News
Play Video

Model 3 Production Up, Battery Breakthrough, A Dying Man’s Wish - TEN Future Transportation News

2017/12/16
Range loss in the bitter cold | Model 3 Owners Club
Play Video

Range loss in the bitter cold | Model 3 Owners Club

2018/01/07
Tesla Model 3 details leak online
Play Video

Tesla Model 3 details leak online

2017/05/25
OMG ELON MUSK SAYS TESLA STOCK IS OVERVALUED!
Play Video

OMG ELON MUSK SAYS TESLA STOCK IS OVERVALUED!

2017/05/26
Elon Musk at Tesla Shareholder - Model Y 1st Image - 2017-06-06 [Part 2 of 4]
Play Video

Elon Musk at Tesla Shareholder - Model Y 1st Image - 2017-06-06 [Part 2 of 4]

2017/06/06
Why Gasoline Powered Cars Are Obsolete - Jim Smith
Play Video

Why Gasoline Powered Cars Are Obsolete - Jim Smith

2016/09/16
Tesla Model 3 vs Chevy Bolt: Cost, Speed, Safety and Tech Features Reviewed and Compared
Play Video

Tesla Model 3 vs Chevy Bolt: Cost, Speed, Safety and Tech Features Reviewed and Compared

2017/01/09
Clueless - Car Companies Don
Play Video

Clueless - Car Companies Don't Get It- In Depth

2018/01/22
Tesla in India, German Gigafactory, Model 3 Details, and Model S Sales | Teslanomics Live 20170529
Play Video

Tesla in India, German Gigafactory, Model 3 Details, and Model S Sales | Teslanomics Live 20170529

2017/05/23
Powered by YouTube

Disclaimer

None of the audio/visual content is hosted on this site. All media is embedded from other sites such as GoogleVideo, YouTube etc. Therefore, this site has no control over the copyright issues of the streaming media.

All issues concerning copyright violations should be aimed at the sites hosting the material. This site does not host any of the streaming media and the owner has not uploaded any of the material to the video hosting servers. Anyone can find the same content on Google Video or YouTube by themselves.

The owner of this site cannot know which documentaries are in public domain, which has been uploaded to e.g. YouTube by the owner and which has been uploaded without permission. The copyright owner must contact the source if he wants his material off the Internet completely.