By on April 26, 2016

Tesla Model 3 Prototype on road, Image: Tesla Motors

Tesla is in the game to make money with its $35,000 Model 3, due out in late 2017, but that claim was recently disputed by an industry insider.

Jon Bereisa, an electric vehicle engineering consultant (and former General Motors systems architect responsible for the Chevrolet Volt), said recently that the Model 3 needs to be much more expensive for Tesla to break even, according to StreetInsider (via Electrek).

Bereisa, who serves as president and CEO of Auto Lectrification LLC, was speaking on a broadcast hosted by UBS analyst Colin Langan. He said that the likely makeup of the Model 3 battery, as well as its capacity, would cause the factory variable cost (FVC) of the vehicle to be more than $1,500 above the EV’s stated price tag.

Assuming a 60 kilowatt-hour battery (at a cost of around $190 per kWh), plus building costs, Bereisa said this would mean the Model 3 would have to sell for $45-48,000 to become profitable.

Jeff Evanson, Tesla’s vice-president of investor relations, called in to dispute those assumptions. He said the cost of batteries at Tesla are already under $190/kWh, and added that the Model 3 will have a battery pack of less than 60 kWh.

Nor will the model feature all-aluminum architecture, said Evanson, poking holes in Bereisa’s assumption about the Model 3’s building materials and their associated cost.

It was a lot of he-said, he-said, with Bereisa saying he doubted the price of batteries could go much lower than $190/kWh (given the current state of lithium-ion battery technology), and added that a 55 kWh pack would be needed just for 200 miles of range. Tesla claims the Model 3 will travel a minimum of 215 miles on a charge.

Who’s right and who’s wrong here? Who knows.

The model 3 is still well over a year from production, so it’s all hearsay at this point.

[Image: Tesla Motors]

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162 Comments on “Can the Tesla Model 3 Break Even at $35,000? This Guy Says ‘Nope’...”


  • avatar

    The Model 3 is going to “start at” $35k the same way the Porsche Macan “starts at” $47.5k. If ATPs aren’t close to $50k (or over) I’ll be really surprised.

    • 0 avatar
      dwford

      I love how pundits and analysts just say it can’t be done, as if they really know what Tesla has developed. These talking heads are just guessing

      • 0 avatar

        Yep, we’ll see. The battery costs are the big mystery.

        • 0 avatar
          mcs

          GM admitted the cell cost for the Bolt was already under $145/kWh. It’s suspected that Telsa’s is the same or lower. Tesla has big contracts with the mines in Sonorra and Nevada, so that should help with their lithium supplies and costs.

          A couple of things coming that will lower battery costs. One is the reduction of the amount inert material in lithium cells making them more dense. The other is reducing the time to actually make them. These technologies are already in pilot production and will be scaling up to mass production about the time the Model 3 ships.

          • 0 avatar
            agzand

            The companies that Tesla has nonbinding contracts with have not produced a gram of lithium yet. They don’t own any lithium mines. They are planning to do it. It is more of a negotiation tactic than real supply contract.

          • 0 avatar
            mcs

            The Sonoran mines will produce. Investing in a new mine is the best way to get a good price.

            You know, the best investments I’ve made were high risk. That’s how you make it in this world. Every time it’s taken craploads of money seeming dumped into a bottomless pit with plenty of experts telling me it was going to fail. When I worked for other companies, I worked under VPs that were supposedly experts that said certain technologies that are now commonplace would never work. I once had to endure a 30 minute lecture from a VP on why VOIP would never work. Another VP insisted that texting would never catch on in the US and that phone users would never accept a touchscreen keypad for dialing a phone. I can even go back to when I was in school getting a lecture on why serial data communications would never progress beyond 19,200 baud. Some people seem stay up late at night trying to convince themselves that they’re going to fail. Some of us forge ahead and find ways to succeed.

          • 0 avatar
            redav

            The GM $145/kWh price is for cells, not the complete battery. The $190/kWh in the article is for complete, assembled battery.

      • 0 avatar
        DeadWeight

        Musk has devolved into full-on snake oil salesman. If he were a listed stock, I’d short him with leverage.

        It’s one thing to lose a ton of money on $65,000 and up Model Ss, while offsetting the bleeding by selling (limited) carbon credits; it’s another thing to claim that same business model will prove profitable on a $35,000 (nearly half the price) much larger batch of maybe-one-day-will-be-built-at-all (or have 15% to 20% of the initial pre-orders delivered if a miracle can be pulled) 330,000 Model 3s that Tesla has neither the literal tooling, plant, capacity or supplier base to build not just within 2 years, but not even within 6 years, realistically.

        And now, the competition that has much bigger capex capacity, borrowing capacity and a massively larger supplier base is ramping up an entire slate of much more competitive hybrid and pure electric vehicles to compete head on with Tesla in the months and years that follow.

        Only the true, deep, deluded Tesla Jamestown KoolAid drinkers can’t smell and taste the cyanide at this point.

        Tesla is like a massively glorified, hyped, social-media driven crowdfunding enterprise with the Model 3 pre-order nonsense at this point.

        • 0 avatar
          Lynchenstein

          Quit beating around the bush. Just come out and say what you want to say and be done with it. No need to be coy. :-)

        • 0 avatar
          nitroxide

          Amen, brother. Those were my thoughts as soon as I heard about this vaporware Model 3 a few years ago.

        • 0 avatar

          “Musk has devolved into full-on snake oil salesman.”

          I KEEP SAYING THE SAME THING.

          #1 The Model S 40KWh was marketed as affordable and it very well would have been. They led me to BELIEVE I’d be able to buy one for less than $60,000 which led me to purchase stock in the company in 2012. Then I find out it wouldn’t have supercharging and then I find out it’s being discontinued and I’m like Waaaaaaa????

          #2 People on this site (among others) have been arguing with me whenever I say the Model 3 will NEVER be had for less than $40,000.

          If it ever was – it would be so many years in the future it would no longer be relevant.

          There’s no way they could pay off the R&D costs and the early issues that will inevitably pop up and still have a price that low.

          I’d estimate that the realistic cost of the Model 3 would be well higher than $40,000 – probably even higher than $50,000.

          You must factor in the market value adjustments due to the ridiculously high demand.

        • 0 avatar
          hreardon

          No disagreement here. The big question in the short and medium term is how quickly the competition will be able to roll out their equivalent competitors.

          I give Musk credit – SpaceX has accomplished more in launch technology in the last ten years than NASA, Roscosmos, ESA or JAXA has in thirty.

          All that said, in the space arena he’s fighting against government bureaucracies that move at a glacial pace and have zero risk tolerance.

          In the auto business, perhaps the most brutal, cost-driven, overly saturated and highest fixed cost business around, the landscape is very different.

          As I’ve said many times before, BMW and Audi are going to be Tesla’s biggest challenge. And while we knock on Volkswagen for many things, the diesel scandal being most recent, I suspect that the diesel crisis is the watershed moment that pushes electrification to the forefront at the German automakers.

          You know how everyone complains that the next generation of X or Y model seems similar to the competition? Think the F30 3-Series and the B8/B9 A4. The reason is because in the auto industry you generally are more profitable and successful being incrementally better than the competition – not light years ahead of it. Being light years ahead in a production series car generally leads to lots of expensive trade-offs. Incremental improvements, therefore, are preferred for a whole host of reasons.

          So with that, I firmly believe that in the short run, hybrid-electric setups that substantially improve fuel economy are going to be the big winners as battery technology improves. If your competition is doing ~30mpg average and your new hybrid-electric drivetrain can get 40-45mpg, then you’ve killed off diesel’s big advantage and well beyond the competition.

          Tesla will still have a market because they own the mindshare for “electric cars”, but once the big boys get up to speed (assuming they can), Tesla will have some serious competitive pressure.

          • 0 avatar
            Pch101

            “once the big boys get up to speed (assuming they can)”

            Tesla’s strategy is to make an EV with a big battery, then sell it at a loss in the hope that the brand will be able to carry it to whatever comes next.

            Nobody is inclined to copy that business model because of that four-letter word: loss.

            The reason that major automakers make funny little EVs with short range is because they cost a lot less to make. They try to get away with having as little battery as possible, and maximizing whatever battery it does have by keeping the weight down. They aren’t all idiots, they just aren’t inclined to design the vehicle so that it loses money on purpose.

          • 0 avatar
            hreardon

            Good call, PCH – it’s the Amazon model, and it works so long as investors keep pouring money in in the hopes that big profit numbers are “just around the corner”.

            Frankly, these business models skeeve me out, but kudos to Musk (and Bezos) for milking the equity system as well as he has.

          • 0 avatar
            redav

            A battery EV *should* have the minimum range needed for the application. The penalties for weight, space, and cost are too high to haphazardly throw too much range into the car.

            Despite liars who say “Give me 600 mi range, and I’ll buy it,” there really isn’t a market for such vehicles.

          • 0 avatar
            ToddAtlasF1

            I’m not fully in disagreement with Pch101 here, but I think the big producers are anticipating and accepting some losses from their electric car programs. They’re making them under duress. They know there is little demand at prices that would produce profits, but they have targets for sales to meet in order to keep various over-reaching state governments off their backs. Then there are the CAFE implications…

        • 0 avatar
          LXbuilder

          Nice to see at least not everyone has drank the Koolaid offered up from the cup of Musk.
          Snakeoil salesman he is.

      • 0 avatar
        porschespeed

        Yeah, I remember hearing that pie-in-the-sky nonsense back when I told you a GM BK was inevitable. We don’t have to know everything, just what the P&L says and know the industry.

        Back when Brickin’s latest con – Chery – was still being pimped, we knew it’d never happen but you guys, you knew better.

        Good luck with that.

    • 0 avatar

      This gets to the issue of selling it as a car vs selling it as a lifestyle accessory. When you sell Accessories, you can charge stupid money only loosely associated to the actual car-this is why everyone wants to sell the next BMW 3 series. Sure, you have to provide an adequate level of luxury or sport, but beyond that at the high end it becomes $1500 worth of equipment at OE being sold for $30k more at retail. This is how you end up with a 200 mph AMG Black idling down the West Side Highway on the way to Wall Street. See also “Ferrari” or “Maserati”. I love the rip of a twelve, but really, $300k ? Telsa is an Accessory.

      When you sell real world cars, where folks care about stuff like “cost per mile”, and “monthly payments”, and oh yes, the car has to have 99.9 percent up time to the first owner, it is a different equation. Altima v Camry v Accord. No glory, not an Accessory, even if a good car.

      The first Tesla was a Lotus. There’s one around here, it’s a pretty toy. We have lots of the current sedan, which the more I look at it I’m convinced it was designed by ex Caddy and Buick engineers. It sells to top 10 % affluent multi car households. I don’t see any outside the ahem “better Towns”.

      I would love to see them succeed. There is a huge gap between selling lifestyle accessories and cars to the masses, and for most of the market, a lifestyle accessory is a dream. So is a practical $35k family car from Tesla.

      • 0 avatar
        DeadWeight

        “So is a practical $35k family car from Tesla.”

        Tesla had the best chance of actual,real profitability by staying niche while selling higher-priced vehicles and utilizing carbon credits.

        Going to a more mass-market vehicle without being able to proportionately “scale down” component and assembly costs to compensate for the lower price, while simultaneously chewing through carbon credit allowances (their biggest subsidy) to the point of exhausting them is asinine.

        Tesla’s business model is fundamentally flawed.

        When Tesla’s momentum chasing stock junkies realize Big Mo has left the building, Tesla’s present and future funding of ongoing losses becomes a much larger, critical threat.

        • 0 avatar
          hreardon

          good point, Deadweight. There’s a reason the big boys introduce the latest and greatest technologies on their flagship products: they can charge a premium, recoup part of the investment and work the bugs out. Once the reliability improves and costs decline these technologies make their way into the rest of the product lineup.

          This applies to everything from the Audi A8’s use of aluminum to BMW’s i8 and i3 electrification projects.

          • 0 avatar
            healthy skeptic

            @hreadon

            This applies to Tesla as well. You just described exactly what they’ve been doing.

  • avatar
    dukeisduke

    The Daffy Duck front end doesn’t help, either.

  • avatar
    seth1065

    They are spending money like a drunken sailor on leave so they gotta start making some cash soon, but I would think that when the 3 starts rolling out the door it will be in the high 40″s to low 50’s.

    • 0 avatar
      probert

      Unless drunken sailors invest millions in research and development, and in making the worlds largest battery factory (gee, did Bereisa take that into account) I’d have to say you’re wrong.

      Apologies to drunken sailors if I have misjudged your lifestyle choices.

      • 0 avatar

        Tesla’s not the only company building a giant battery factory. It’s just the one that gets all the media oxygen in the US.

        • 0 avatar
          mcs

          There are a lot of companies investing in lithium production facilities and technology. Some of the new tech doesn’t require the physically large facilities the old methods do. It’s related to elimination of the drying process of the electrodes.

        • 0 avatar
          VoGo

          Tesla’s battery factory is as big as all other battery factories combined. Maybe that’s why Tesla gets so much press?

          • 0 avatar
            porschespeed

            Tesla merely owns the building and the dirt. Everything inside is owned by Panasonic. Which makes it easier for Panasonic when the Tesla BK happens. Buildings and land are cheap in BK.

            Giga is merely one of several battery factories. There’s competition, And it’s in low-wage countries, where everything is cheaper.

            http://www.mining.com/web/the-lithium-ion-battery-megafactories-are-coming-chart/

            Learn the rest of the story. You won’t fall for smoke-n-mirrors con men like Malcolm Bricklin, Shai Agassi, or Elon Musk.

          • 0 avatar
            VoGo

            PansySpeed,
            The fact that competitors are rushing to copy Tesla by building big battery factories only validates their model.

            Tell us more fascinating revelations like the one about Panasonic assuming most of the manufacturing in the Giga factory. Does Apple really manufacture all those iPhones by themselves?

          • 0 avatar
            porschespeed

            Since apparently we’re going to have pet names for each other, I’ll name you VaGoo…

            That Panasonic owns all the equipment, is a matter of record. More delusionally, the world is not looking to follow the Pied Piper of South African’s imagined “lead”.

            They were already in planning, when Elon decide to copy *them*.

            Electrics have been around for over 100 years. Self-driving research (of the viable kind) has been around since the ’80s. Musk is hardly a trailblazer, pioneer, or some frakkin’ visionary. But he is a con man, and has your number on speed dial.

            Musk is the lucky recipient of a stock grant, nothing more. Musk was kicked out of the X/Confinity merge long before the sale of PayPal to eBay. He was seen as merely a carnival barker, and his time of being useful had passed.

          • 0 avatar
            VoGo

            I call you PansySpeed because your initial post 3 weeks ago (after a long respite) was to call people who disagreed with you on gun control pansies. You earned it.

          • 0 avatar
            28-Cars-Later

            Children, play nice.

          • 0 avatar
            VoGo

            I’m trying, but the guy starts out with this gem: “Egads, This is a car site. When did it get populated with anti-gun pansies?”

            If he wants to stick to cars and knock off the name calling, I’m happy to call a truce.

          • 0 avatar
            porschespeed

            So a ‘car guy’ who doesn’t like/own guns?

            Yes, I’ll stick by my statement. I know many hundreds of car guys. To a man (and woman) they *all* are gun people. They understand and appreciate that cars are lethal if used inappropriately, but they can still be fun. Oh, and cars kill way more people than misused guns – if you actually know the stats.

            “Vagoo” knows nothing about cars, the car business, or even how to read a 10K. He’s a dilettante at most generous. I find him mildly amusing as a troll, but he’s hardly to be taken seriously by grown-ups.

            Oh yeah. You have refuted precisely none of my points, so they all stand.

      • 0 avatar
        Sigivald

        R+D and giant factories are nice, but you still have to turn a profit to keep the doors open …

        (Per Forbes on the latest Tesla financials, from February:
        “The Silicon Valley electric car maker said net loss nearly tripled to $320.4 million, or $2.44 per share, in the fourth quarter ended Dec. 31 from $107.6 million, or 86 cents per share, a year earlier”

        That … well, it justifies *some* skepticism as to their long-term financial health and the wisdom of current spending, no?)

        • 0 avatar
          VoGo

          Someone should tell that to Jeff Bezos.

          • 0 avatar
            Pch101

            Amazon has turned a profit six out of the last eight years.

            This meme about Amazon losing money has got to stop, because there is no truth to it.

          • 0 avatar
            VoGo

            And the decade before that? The point is that Amazon isn’t afraid to invest in businesses it believes in, even if it means forgoing profit for years.

            This has become pretty typical for fast growing businesses, and investors are increasingly comfortable with it. Hence the $32B valuation for Tesla.

          • 0 avatar
            Pch101

            Tesla is in a completely different business, one which bears zero resemblance to Amazon. Amazon is a disruptive player in the retail space, while Tesla is essentially a traditional manufacturing company that lacks the scale that such companies need. There is no comparison.

            Nor is there any indication that Tesla will be able to achieve the kind of scale that automotive producers need to have. Tesla has relatively high overhead that only increases as it moves more units.

          • 0 avatar
            VoGo

            PCH,
            I agree with some of your points, but not all. Retail and Auto mfgr ARE different businesses, but Tesla is absolutely disruptive. Fastest sedan in the world; best selling luxury car; greatest battery factory on earth…)

            Tesla has scale where it matters – in batteries and in an auto plant that can crank out 500K vehicles annually.

            To say that Tesla overhead only increases with more units is jibberish. Yes, of course, every company that adds revenues also adds some overhead, but what matters is that the overhead per unit declines.

            Remember, Tesla SG&A will look high compared to other automakers because it includes actual Selling, which no other automaker does.

          • 0 avatar
            Pch101

            “Disruptive” has a specific meaning in this context. And Tesla is not disruptive.

          • 0 avatar
            VoGo

            Got it. Clay Christensen’s precious theory requires that a company start at the low end to be defined as ‘disruptive’.

            Sorry, but if you transform one of the largest segments of the economy, you’re disruptive in my book. And that is exactly what Tesla is doing, while the B&B shakes its head in disapproval.

          • 0 avatar
            Pch101

            Tesla hasn’t transformed or disrupted anything. It’s the manufacturer of a niche product. Meanwhile, the vast majority of the planet keeps driving just we always have and the world marches on.

            This bears no comparison to torpedoing brick-and-mortar retail and changing how consumers interact with the shopping experience, as Amazon has done.

          • 0 avatar
            VoGo

            Amazon is 22 years old. Tesla is 13. We’ll see in the next 9 years who was correct.

          • 0 avatar
            porschespeed

            VoGo, Tesla is not disruptive. It’s overhead continues to grow, making the cars unprofitable if they were $10K more expensive. Were you to understand a 10K, you’d understand this.

            It’s no luxury sedan, it’s the fastest for about, 30 seconds then the battery is empty, it’s a ‘best seller’ only in the sense that other companies have a lot of granularity – Tesla has 2 cars.

            You are making all the fanboi arguments, we are making the business case. It’s a vanity project cash furnace. Not a viable company.

          • 0 avatar
            VoGo

            PansySpeed,
            The idea of a Porsche fanboi like yourself calling another carmaker a “vanity project cash furnace” is laughable.

            Remember, Telsa is worth $32B – it’s not some toy carmaker that’s been tossed around by VW time and again for chump change.

            Maybe you’re just butthurt that the Panamera is getting dominated by the Model S?

          • 0 avatar
            Kenmore

            This is an amazing and slightly alarming display of disciple-phenomenon going on here.

            How can someone become passionate to the verge of abusive defending another guy’s company that makes something as prosaic as just another motor vehicle?

            When I get home Ima launch a mini research binge about fanboi/disciple/acolyte/whatever-ism.

          • 0 avatar
            porschespeed

            VoGo, Soo, already run out of valid arguments I see.

            I remember AOL, Boston Market, and so on used to have a really high unsupported valuations too. If you believe they could ever support that, you don’t know a 10K from 10 kilos of magic mushrooms.

            Pana getting spanked by a Model S? Yeah sure, since you’ve never been in either one of them. The interior of the S is a Chevy truck compared to Audi, Porsche, MBZ interiors at that price point.

            And around a track? Yeah, you’ll get two hard laps out of the S. Then hope to find a Supercharger.

            Since you’re new here and I’ve been sparse the last few years, let me help ya. I’m not a Porsche fanboi. I understand what they do well, and do wrong. Oh, and I don’t like UberBeetles.

            Kenmore, I would guess VoGo is typing this on his phone, likely during high school. There are completely insane statements that are made by the slavishly loyal, who are willfully blind to the reality of what they worship. That’s what most consider fanboi-dom. They aren’t part of rational discourse, but I think you were here and remember back as GM was dying.

          • 0 avatar
            VoGo

            PansySpeed,
            I’ve been here consistently for 10 years.

            And I’ve been in both Teslas and Porches. The Panamera gets spanked in the marketplace by the Model S, just like the S-class and every other old luxury sedan.

            Panamera on a track? Maybe a few, but the one’s I’ve seen mostly shuttle their owners between the golf club and their Viagra doctors.

          • 0 avatar
            Pch101

            Market cap is an indication of what people will pay for the stock today. It isn’t an indication of whether the company is financially sound or has that amount of intrinsic value.

            Within the last year, SunEdison went from the market leader in its niche to bankrupt. Its market cap within the last year was 100 times higher than it is this morning. Not the first time that this has happened, and it won’t be the last.

          • 0 avatar
            VoGo

            Yes, market caps change. At their essence, they indicate investors’ expectations of a firm’s eventual discounted cashflows. Immature companies like Tesla are likely to see a lot of volatility in their market caps.

            But that doesn’t mean that Tesla is doomed to fail. I wonder what drives all this skepticism of and antagonism towards an American automaker trying to transform the industry.

          • 0 avatar
            Pch101

            If one prepares a discounted cash flow analysis of a business that has net losses and no projected earnings, then you end up with a no-buy signal and you avoid it like the plague.

            There is no income/fundamentals-based valuation approach that justifies anything close to the current stock price. Tesla is a purely speculative play that requires one to hope that you can sell the stock for more than you paid for it, by whatever means. That doesn’t make it bad, but it does require you to bet on some combination of hope and the greater fool theory.

          • 0 avatar
            porschespeed

            10 years? I don’t remember your handle. I faded away during the Bertel Days, so who knows.

            Market Cap is driven by speculation and dreamers who can’t read a P&L. Tesla will get adjusted down. 25% of the issued stock is borrowed for the short. Not everyone is sucked in by fantasy stories.

            Regardless you have no concept or understanding of “luxury” if you think a Tesla is a “luxury” car. Just because it has a big price tag, doesn’t mean it’s luxurious. I have a friend with a Tesla, it’s not a luxury car, it’s a statement of how trendy and green you are. That’s why he bought it. Inside, it was a Hondota.

          • 0 avatar
            VoGo

            I’ve only been Vogo for about 5 years. I changed because my previous handle used my first name and my small town, and I realized it wasn’t very confidential.

            There were still a couple miscreants here who probably belonged on Farago’s new site, who started threatening me and my family with physical violence. So I changed to something less transparent, so as to keep my family safe in case one of them was serious.

            Look, market cap is what it is. Certainly it’s volatile. But it still is a reasonable indicator of the investment community’s faith in Tesla.

            Is The Model S a luxury car? Depends on your definition. Certainly, the interior is not in the same league as the S-class. I would put the new C and E ahead of it. But that is where most of the companies that tabulate sales put the Model S, so I am using the standard definition.

          • 0 avatar
            porschespeed

            Don’t fret, I’m also one of the “miscreants” on RF’s “new” site. But actually harming (let alone killing) you for being uninformed? That *is* more than a bit of a stretch. And certainly not worth spending a single day in jail over, let alone 15+ years. Seriously, are you that afraid?

            I haven’t been here much at all since early in the Ed/Bertel days. Though,to be fair, Bertel was ofttimes a kindred soul with a love of kink, and an appreciation of the ease of car show ‘models’. That was about all we had in common – he had an agenda, and god forbid you actually knew looking at a live Beijing streetcam, that it was so smoggy you could barely see. It interfered with his narrative. Perhaps it was the censors…

            Market cap on a purely speculative company is merely a dog-n-pony show, with some rich guys beating you to the upswing, and guys more like me riding it right back down. Believe whatever you want, Tesla isn’t viable, and unless ‘investors’ keep the money hose running full blast for another 5 years+, *and* everything changes in miraculous ways, the BK is inevitable.

            By then they’d need to make well over $10B actual profit, just to get back to zero. Not gonna happen, no matter how hard you wish it.

          • 0 avatar
            VoGo

            I have come to believe that when someone claims to own several guns, shares his fantasies about killing people online and threatens your family, that it’s time to take it seriously.

            And to be clear, I’m not misinformed on gun control. Just before my time. Which will start as the Senate does its job. Which can either be before or after January 20. We win either way.

            If you think otherwise, you are free to join a state militia and get all the arms you can off of bears.

          • 0 avatar
            porschespeed

            VaGoo, You are a sad and frightened little man.

            Hope the system protects you from all the evil in the world.

    • 0 avatar
      hreardon

      Tesla is in the transportation business. What is unique about them is their mode of propulsion: compared to the established players, they’re purely electric.

      They’re disruptive in the sense that the Apple iPhone was the first mass-produced and accepted mobile phone that eschewed physical buttons and combined two key features better than anyone else: cellular and compute.

      Tesla is trying to make an Apple play by controlling the supply chain and owning the premium market. It’s not a bad strategy. They’re helped by government incentives, just as Apple was helped by carrier incentives.

      In some ways, this could play out like Apple and Samsung: Apple brought all the pieces together and showed the industry how it should be done. There are lots of players, but the profits go disproportionately to Apple. In the automotive world will things play out similarly? Who knows at this point.

      Apple’s advantage is that it doesn’t really own the manufacturing and the related cost structure that goes with it. Tesla does, along with all the liability that being an automaker entails.

      Tesla’s disruption may turn out to be more “awakening the sleeping giants” than running away with the spoils of victory, especially if you read recent speeches by German auto execs who have done an about face when it comes to Tesla and electrification in general. The whole diesel fiasco will accelerate the electrification push substantially.

  • avatar
    heavy handle

    The question then becomes, can GM make money on the Bolt?

    Tesla’s lean and mean, and they know the battery market better than anybody. I wouldn’t be surprised if GM spent way more money on the Bolt.

    • 0 avatar
      krhodes1

      GM doesn’t have to make money on the Bolt. They have product that makes profits to make King Midas blush, aka all those sweet, sweet pickups and SUVs.

      • 0 avatar
        Sigivald

        Also, won’t the Bolt be on an existing platform and share lots and lots of parts with other GM cars?

        GM has economies of scale Tesla can only dream of, despite its manifold other issues (and Tesla’s strengths).

        • 0 avatar
          heavy handle

          GM also has overhead and a management structure that Tesla can only dream of in their worse nightmares.

          All I’m saying is if an ex-GM guy doesn’t think Tesla can build the X for that price, then the obvious conclusion is that GM can’t build their equivalent model for that price.

    • 0 avatar
      agzand

      GM doesn’t have to make profit the way Tesla has to because they can use ZEV credits. Tesla has no use anymore because nobody buys them from Tesla anymore (most companies have a plugin these days). Also GM has excess capacity (no factory investment or depreciation) and component cost sharing with other models, even if the platform is new. A big part of cost is accessories and trims that can be shared with other models. Also GM builds in lower cost regions (Korea, Detroit) instead of Fremont, where a two bedroom apartment rent is $3000 per month. Finally, Bolt is a lower cost design (torsion beam, more compact dimensions, simpler body panels, no full glass roof, etc), everything equal it will still be a few thousand dollar cheaper to build than Model 3.

      • 0 avatar
        stuki

        Tesla doesn’t really have to make money, either, as long as Yellen keeps printing, and handing the fresh print to the prime Tesla buying (and investing, they’re largely the same people, listening to their own glowing praise echoing back and forth in the cathedral St. Elon built) demographic.

      • 0 avatar

        Plus the bolt is 35k after the tax credit that would put the full retail price about where the guy in the article would put it.

  • avatar
    islander800

    Well over a year from production is likely an understatement, to say the least, if one believes The Autoextremist blog (Peter De Lorenzo – check out his column on the Model 3).

    According to Peter, the Model 3 is presently, at best, a concept car, a non-functioning show car, not even a working prototype. It will likely be 2019 before the first one rolls off the assembly line. Hope all the first adopters have patience.

    Musk does a great job of self-promotion as the 21st century free enterprise entrepreneur, when in fact, up to now, he’s been a master at milking government grants and subsidies, meaning hard working taxpayers, to fund much of his dreams. His Model S is still losing thousands per car sold. Oh, and by the way, that magnificent Model S? It has received well-deserved rave reviews thanks in no small part to the research and design work done by car people from – wait for it – Detroit. These are the guys with the experience of actually designing, developing and building a car because, once all the 21st century high techy stuff is stripped away, it is, after all, still a car. Funny how Elon doesn’t seem to give these unsung heroes any credit for “his” conception. Peter points out that many of those highly talented people have since left Tesla, so….

    • 0 avatar
      badreligion702

      Not only will it be at least 2019 before these start being delivered to customers, it will probably be 2024 before all the preorders are fulfilled. And that is all assuming Tesla is cash flow positive at that stage.

    • 0 avatar
      heavy handle

      Peter has a long track record of being wrong, especially when it comes to Tesla.
      You will need to elaborate about those “government grants and subsidies.” As far as most people know, Tesla got a loan early on, and paid it back early (with interest, of course).
      Are you talking about the tax incentives that buyers (not Tesla themselves) can apply on any electric car? How are they different from tax incentives to buy huge SUVs (over 6,000 pounds)?

      • 0 avatar
        TrailerTrash

        what huge incentives from the government support SUV sales?

        • 0 avatar
          jefmad

          Section 179 of the tax code. As long as the vehicle is over 6000 lbs GVW you can expense the car in one year and not depreciate it. Of course, you have to own a business first and have some sane reason why it is a business vehicle and not personal use.

          • 0 avatar
            heavy handle

            Also, it should go without saying (especially with this crowd) that GM is the undisputed champion of taking government money without paying it back, not Tesla.

        • 0 avatar
          mcs

          >> what huge incentives from the government support SUV sales?

          Oil subsidies. They exist and I actually get them.

      • 0 avatar
        porschespeed

        Took DeLorenzo a long time to come around on GM. He was at least a year behind TTAC back in the pre-BK days. In the beginning, he sounded like the rest of the then-faithful.

        But he apparently has fixed himself – though I seldom read him anymore.

    • 0 avatar
      mcs

      Not a working prototype? Then what the hell were they driving around at the announcement. There are even videos of prototypes on the road.

    • 0 avatar
      hreardon

      I enjoy reading Pete DeLorenzo, but I agree – his views on Tesla are skewed toward the old school.

      Not that he’s completely off base with his criticisms, but I don’t take his prognostications as gospel.

  • avatar
    JRobUSC

    I’ll give Elon Musk this much: he’s a marketing genius. With nothing but smoke, mirrors, and empty promises, he just convinced 400k suckers, uh, I mean “customers”, to give him a $400 million interest free loan for at least two years. It’s mind boggling really.

    • 0 avatar
      VoGo

      I’m not accustomed to being called a sucker by someone named “JRob.” Yes, I put down a deposit on the Tesla 3. It’s not the first time I’ve put down a deposit on a vehicle. In this case, I can cancel any time I like. Interest rates are so low that the amount lost is a pittance, especially compared to what I may earn by turning around and re-selling my Tesla.

      But you might be challenged to understand that, since you find the idea of putting down a deposit “mind boggling.”

      • 0 avatar
        stuki

        The suckers Tesla are really angling for, aren’t guys like you, who put down a measly 1K. But rather those poor saps who can be convinced by the presence of “all those deposits,” that Tesla will be a runaway success, and they need to get busy “investing” in or lending to them…..

        Of course, maybe Tesla will be a runaway success. Many seem to like the S, although I personally am very unimpressed by it. All concept, no execution, if you wonder why. And, I guess more subjectively, I consider the only thing less engaging than an automatic transmission, to be no transmission at all……

        • 0 avatar
          VoGo

          The fastest production sedan in the world in not engaging to you, and leaves you very unimpressed.

          • 0 avatar
            JRobUSC

            it’s “quickest”, not “fastest”, and the P90D with Ludicrous mode is only the quickest sedan one time, since the battery has to be over 95% charged to use Ludicrous mode in the first place. Which means 95% of the time, it’s a normal car, except for the fact that you can’t drive it wherever you want, refuel it in 5 minutes, and then repeat. You have to plan around the charging. And while you’re right, despite all the shortcomings right now Tesla is the current “cool and trendy” car, we’ll see how well they do once normal folks are subjected to the same constraints with their day to day cars as the uber trendy, uber rich folks who made Tesla what it is. Those rich Tesla lovers laugh and accept the reliability issues and driving constraints because they like what having a Tesla says about them, and they have other cars to drive. When the riff raff that is John Q Public starts discovering what Tesla ownership is really like in a vehicle they need to rely on daily, we’ll see. That’s if Tesla ever makes it that far, of course, though that $400 million interest free loan all those Tesla teat-suckers just gave them will certainly help in the meantime.

          • 0 avatar
            derekson

            Pretty sure the fastest production sedan in the world is still the Bentley Flying Spur with the W12 that tops out at 203 MPH or so.

            Here’s a hint: fastest and quickest are not the same thing.

          • 0 avatar
            porschespeed

            Vogo is part of the easily impressed, and even more easily conned crowd.

            There’s one born every minute.

          • 0 avatar
            VoGo

            I stand corrected: The P90D is the quickest, not the fastest.

            And yes, I am easily impressed by anything that gets to 60 in less than 4 seconds.

            Easily conned? Hey, I put down a refundable $1K deposit – I didn’t buy the stock!

          • 0 avatar
            stuki

            The thing is put together by standards that wouldn’t pass muster in a Toyota from 1970. Nor a Benz from 1955.

            I could do 0 to 60 in sub three by simply falling off a building. I was there when ThrustSSC first broke the sound barrier on land. That actually was an impressive sight. As are some of the faster, electric powered railguns currently being developed. A Makita powered BMW impersonator (the ultimate power tool…..), not so much.

            Tesla has done a great job putting EVs on the map, and demonstrating they’re not just science fiction, but can indeed be a possibly realistic transportation alternative for some to many. It’s hard not to be impressed by the sheer doggedness of Musk, doubling down his own money chasing that particular vision of his.

            But for all that, as of current, viewed as a car, the Tesla has still just moved from SciFi to perhaps something cobbled together in a, perhaps Jay Leno sized, garage. And I still don’t like cars without manuals. At least unless they’re jet powered and break the sound barrier.

      • 0 avatar
        White Shadow

        If you can’t think of a better way to park your liquid money than putting it in a low interest bank account, then I can see why you’d think giving it to Tesla for free is a good idea.

        • 0 avatar
          VoGo

          It’s a deposit. It gives me the option to buy a car ahead of 300,000+ other schlubs. That option has value to me which exceeds the interest I am forgoing.

          • 0 avatar
            mcs

            VoGo is from Boston. A thousand dollars is about what they charge for a hot dog, a Sam, and parking at the Garden or Fenway. It’s nothing to us.

            I went along with my son to buy his first new car. The f-ing a-holes tried to charge him $800 for car wax and scotch guard. Add to that the cost of the time wasted trying to deal with these idiots. It wasn’t even on the sticker. They tried inserting it into the contract hidden between all of the miscellaneous fees. That $1,000 deposit for Tesla is a small price to pay for not dealing with borderline criminals.

            We weren’t even getting something like zymol carnauba paste or Swissvax. It was no name liquid crap that looked like it came from a dollar store somewhere. They took it off the contract because the chances of finding another buyer that could easily afford the car and had the skills to drive it and its six speed manual transmission off the lot by the end of the month were pretty slim.

            So, a $1,000 to pay for some tooling to get installed in Fremont or dollar store car care products for $800. You know, I’d go for supporting the car factory and the hope that sometime in the future that I might be able to buy a car in peace without an attempt to force $800 car wax from a dollar store or Alibaba.com on me. As for my son, he’ll be able to afford pretty much anything by the time he’s ready for another car. I can guarantee you he’s going to avoid having to go through that mess again.

    • 0 avatar
      healthy skeptic

      @JRobUSC

      Speaking as one of the “suckers” (who stood in line, no less), I didn’t give Musk an interest free loan. I’m not expecting a payback or interest. I’m expecting a car.

      Maybe ‘layaway’ is a better term. :D

  • avatar
    TrailerTrash

    OK. So the never ending chorus of Tesla supporters/apologist is never gonna simmer down.

    It’s enough that the government supports cars for the rich in the name of the environment. Might as well give incentive money to those flying 1rst class on a more efficient 7E7.

    And why has Singapore just now added a energy tax to Telsas due to their high use of energy?

    see here: http://www.greencarreports.com/news/1102737_singapore-levies-carbon-tax-on-used-tesla-for-electricity-to-recharge-it

    What IS the energy truth on this car????

    And the fact that my friend is JUST getting his X after a year of waiting is criminal.

    So promising THIS car will be as advertised 35K not knowing about the available incentives and their limits per MFR is as criminal.
    PLUS not knowing when the actual car will sell and the actual cost once production realities hit is again, criminal.

    Tucker was more moral than this guy.

    • 0 avatar
      Sigivald

      “Criminal” tends to mean “actually violates some law”, in proper usage.

      Neither of the things you mentioned breaks any law, to the best of my knowledge – they’re just bad ideas to agree to.

      • 0 avatar
        28-Cars-Later

        Everyone can be classified as such.

        “No one knows how many laws there are in the United States. Apparently, no one can count that high.

        They’ve been accumulating, of course, for more than 200 years. When federal laws were first codified in 1927, they fit into a single volume. By the 1980s, there were 50 volumes of more than 23,000 pages.

        And today? Online sources say that no one knows. The Internal Revenue Code alone, first codified in 1874, contains more than 3.4 million words and, if printed 60 lines to the page, is more than 7,500 pages long. There are about 20,000 laws just governing the use and ownership of guns.”

        http://www.kowal.com/?q=How-Many-Federal-Laws-Are-There%3F

        • 0 avatar
          dal20402

          Very few of those laws actually define crimes. Not every violation of the law is a crime. Usually they just give rise to civil liability. Crimes must be statutory, and there are not *that* many of them.

          • 0 avatar
            28-Cars-Later

            What are your thoughts on Three Felonies a Day?

            http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/1594035229

          • 0 avatar
            dal20402

            It doesn’t deliver what the title promises. It makes reasonable points about how criminal statutes can catch the unwary in behavior that might not seem criminal to a non-lawyer, but it really ends up being relevant only to a narrow audience of professionals (especially… lawyers). The ordinary person in an ordinary job is not committing three felonies in a day, or likely one felony in a year.

            Now civil liability… that’s a different story. By existing, we are pretty much opening ourselves up to accusations of negligence.

    • 0 avatar
      laserwizard

      I would venture to say that the new F-150 is more green than this Tesla – you see Ford has a procedure where all aluminum waste is recycled – and there is enough of that to produce over 30k pickups and that saves 95% of the energy to produce aluminum bodies than from the raw material.

      Question is – whether I’d rather have a robust truck for $35k or a pretender that hasn’t even been built yet.

      • 0 avatar
        stuki

        If you live in a house in San Francisco with an average for town garage, a Tesla is vastly preferable to an F150. Heck, considering SF garage sizes and their general lack of existence at all, it can even be argued a Tesla set to arrive some years into the future, is better than either of the other two alternatives.

    • 0 avatar
      Kenmore

      “What IS the energy truth on this car????”

      Oh, I know that one. The truth is that energy/greeness never mattered, doesn’t and won’t compared to fun, social status and the presumption of intellectual superiority that so far has come with Teslas.

      And I really doubt that 35K is anything more than a ruse so investors imagine a broad future base for Tesla. Why would they put one of their models within reach of guys who use four question marks for one sentence?

      • 0 avatar
        VoGo

        That’s rough. How is a Tesla Model S any different from an S-class Mercedes, in terms of status?

        I know a lot of people who bought a Tesla, Leaf or Prius because they truly want to help the environment. I don’t know why that is so offensive to so many in the B&B.

        • 0 avatar
          TrailerTrash

          Well, I know a few family members who actually call themselves “environmentalist” yet jet to and from their Hawaii vacation home at least 5 times a year.
          Now, consider me a sceptic, but their so called carbon footprint is larger than entire towns.

          And they both own Teslas…because of the “power” and of course…they are doing good for the environment.

          Really…this self hypnosis really exist in the minds of the green rich. And it isn’t no small group. EVERY rich leftist home in Los Angeles is chuck full of hypocrisy and waste. Most green heros are in denial and so full of guilt they hate themselves and force their guilt onto the lower lives outside their pretend world.

  • avatar
    01 Deville

    Average transaction price for bmw 3 series is about 40-44k if model 3 can be obtained with comparable equipment in the same range Tesla will have delivered.

    Those arguing that this car is a concept at this stage are not wrong, as for better or worse Tesla is bringing slicon valley thinking to automotive landscape. They are setting technical and financial targets that they are not sure can be achieved. In other words they are taking more risks for higher rewards compared to established players, which they damn need to do to succeed and make a space for themselves.

  • avatar
    Kenmore

    Oh, sod Tesla. The only battery I’m concerned about is the one in the Dyson stick vac with the Motorhead attachment.

    Will my wife find it an ideal spot-cleaner easy on her tiny arms or will the claimed 20 minutes of battery life turn out to be only 15 and go down from there?

    All my experience with rechargeable batteries says wimpy/dying will be the case but she is so smitten with the V6s she’s demo’d. And the stupid things aren’t removable/swappable as with other cordless tools.

  • avatar
    laserwizard

    Since there is no way Tesla can make all the vehicles that are said to be claimed here, they will raise the price to over $40k baased on the faux demand. I’d be surprised to see this thing sell for under $50k if the demand is as advertised. So you lose 10,000 sales – you are making $15k per vehicle more than you thought and you’re profitable.

  • avatar
    Vulpine

    Clearly the “expert” is guessing, based on what GM is paying for the Bolt by comparison while totally ignoring that certain mechanicals simply will not be in the Model 3, such as that multi-speed transaxle. He also assumes the Model 3 will need a 60kWh battery when we already know that a 70kWh battery can drive a 1000# heavier car over that 200-mile mark.

  • avatar
    Master Baiter

    If the only BMWs sold were base model 328s, BMW would be out of business too.

    These cars will sell for $45K to $50K when outfitted with options, some of which will be software options which have no marginal cost to Tesla. I’m not saying they won’t fail, however the $35K sales price figure is not relevant to the discussion.
    .
    .

  • avatar
    agzand

    Judging from the recent price announcement for the power packs, I won’t be surprised to see Model 3 start around $45k to $50k for a base model. Last spring Tesla said the powerpack will be $250 per kWh. The current price is more than $500, so their $250 was either a mistake or a lie intended to inflate the share price before stock offering. My guess is the same thing will happen, share offering and 50% price hike for Model 3. Comparing Model 3 with Model S, there is not much that can be saved. Same basic car, material costs going up (lithium has doubled since Model 3 announcement). It is not like a BMW 7 series that has a lot of luxury items that can be eliminated to bring it down to a 3 series cost level. Model S is already spartan in the base model, and judging by their operating loss there is not much fat in Model S either.

    • 0 avatar
      mcs

      @agzand Tesla has contracts with lithium mines. I don’t know the details of those contracts, but they may have some insulation from those price increases. Lithium prices might be high now, but these new mines in Sonora Mexico and Nevada come on-line, they will have an impact on prices. The contract with the Mexican mine is for 5 years with an option for another 5 years.

      • 0 avatar
        stuki

        Lithium is a commodity, and mining is pretty far from a Tesla area of expertise, Silicon Valley hubris notwithstanding. If Tesla happens to luck out and be on the in-the-money side of a Lithium price hedge, it might be nice for their temporary cashflow, but has no bearing at all on the ongoing viability of what looks to remain a lithium intense business.

        Unless Lithium production really grows _a_lot_, Tesla will either need to find alternative battery tech for their “cheaper”, “mass market” models, or find ways to be much more efficient in their Lithium use. “Investing” in a granite quarry, doesn’t magically make the price of a granite counter for the kitchen any cheaper for most people, after all.

      • 0 avatar
        agzand

        Check this relatively recent article from a reliable source:

        http://www.ft.com/intl/cms/s/0/4a924a64-99df-11e5-987b-d6cdef1b205c.html#axzz472gHD68V

        They have a couple of contingent agreements with two small companies that do not produce any lithium. This is a pressure tactic to get better deals from 3 major producers. As of now Tesla probably pays double the last year price on lithium. With 60% of the lithium ion battery costs being the material, it is very unlikely that they will be able to hit their price target for Model 3 batteries using current technology. This is reflected in recently announced PowerPack pricing, which is 2x more than the price mentioned last year. Another indicator is the cost of Roadster upgrade pack (which Tesla claims to sell at cost, not at a profit), which shows their costs are in line with other battery makers.

  • avatar
    Fred

    When I first got a good paying job the Lotus Esprit was coming out and at a price I could afford. Of course this is Lotus and it took a few more years and the price more doubled. So fortuanly I didn’t get a first year Esprit. Now I’m not saying Tesla is as bad as Lotus (30+ years ago) as far as development and promises go, but I think you know where I’m going.

  • avatar

    How long have I been arguing that the realistic cost of the Model 3 was going to EXCEED $45,000?

    How many TESLA fanboys have tried to shut my argument down?

    How many people have I argued with about this?

    The ridiculously high demand is going to cause the adjusted market value to exceed $50,000 – maybe even $60,000.

    “You hand me $1000 now and I’ll build you a car for $35,000 that you won’t get for the next 3 years or so”…

    Is this not the definition of a Ponzi scheme?

    I generate worldwide interest to inflate my stock value and then “attempt” to deliver my cars – and hope that they actually work well enough to make my buyers happy years down the road?

    If not …well – I’m still worth Billions.

    • 0 avatar
      hgrunt

      No, that’s actually not the definition of a Ponzi scheme.

      A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.

      (Brought to you by ‘let me google that for you’)

      • 0 avatar

        “A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.”

        Yeah – I’ll deliver the cars to the early adopters while taking money from the others which I use to help build the cars I made for the early adopters.

        • 0 avatar
          FreedMike

          Nonsense. There are all kinds of businesses out there that take deposits on products they haven’t made yet. By this definition every homebuilder in the world is a Ponzi scheme.

          • 0 avatar
            wsn

            No. A home builder can only use your deposit toward building your home, and doing accounting/tax that way. Is there such a term for the deposits Tesla accepts?

          • 0 avatar
            FreedMike

            Same thing Tesla’s doing, wsn.

            Now, if they DON’T build the cars and DON’T refund the deposits, then you have a fraud issue.

    • 0 avatar
      Vulpine

      The problem with your argument about “Ponzi scheme” BTSR, is the simple fact that Musk delivers on his promises. Maybe not exactly on time, but so far he’s been able to do everything he’s promised.

  • avatar
    hgrunt

    Lots of naysayers in here, but let’s do some critical thinking instead of letting the hate of all things electric, get ahold of you and cause a blind internet-ranting rage.

    It’s the former chief architect of the Volt speaking, not a current, or ex Tesla insider. He can only speculate on Tesla’s costs, their projections and future plans.

    It’s fairly apparent to me that Tesla’s intent is to use the Gigafactory, create huge economies of scale and reduce the per-unit cost of battery production so aggressively, they’ll either end up leaders in low cost LiON production or force others to do the same. Their CTO has said in a radio interview, that their approach is to push down the cost, because technology to significantly increase battery capacity is still in it’s infancy.

    Tesla’s CTO has also said on record that they are anticipating $100/kwh by 2020. The Model 3 will begin delivery before then, but the Model 3’s price likely takes a lower kwh cost in mind, rather than current costs.

    With all of that in mind, remember that Elon Musk was also told there was no way to make rocket launches cheaper. Now he can launch for 16% less than the next cheapest rocket, the Chinese Long March, and 41% cheaper than the cheapest ULA rocket.

    • 0 avatar
      wsn

      “Critical thinking” is good.

      If Tesla Model 3 can indeed take off, Toyota can do it better with a fully electric Prius. Toyota has better infrastructure in manufacture, better negotiating power with scale, etc.

      • 0 avatar
        VoGo

        Actually, it’s Tesla that owns scale in battery manufacture, which is the key component for the Model 3. 400K people want a Tesla Model 3, but very few of them would buy a Prius.

        • 0 avatar
          TrailerTrash

          No so fast.
          Other battery factories exist.
          Any battery factory will gladly seell batteries to any auto manufacturer just like any other parts maker in the biz today.

          The truth here,really, is the actual greeness of the Tesla and other cars.

          I still do not trust the savings for the environment. If electricity is to be produced in quantities to power lots of electric cars, then it will have to be explained how. And how is this done cleanly?

          Plus…batteries. Hell…I feel guilty putting all my dead AA and AAA batteries in the garbage…let alone 200 pounds worth every so many hundred Thou miles.

          Where do all these batteries go???????

          • 0 avatar
            VoGo

            TT,
            All of these concerns have easy answers.

            “Other battery factories exist”.
            Yes, but the Tesla Giga factory is bigger than all other Lion factories combined. In the world.

            “If electricity is to be produced in quantities to power lots of electric cars, then it will have to be explained how. And how is this done cleanly?”
            The world is in the process of switching from fossil fuels to solar and wind for electricity generation. Bloomberg has done a series of great articles highlighting this transition. Essentially, solar cells follow Moore’s Law, meaning that the double in performance/cost every 18 months. Already, most of the US coal industry is either in bankruptcy, or close.

            “I feel guilty putting all my dead AA and AAA batteries in the garbage…let alone 200 pounds worth every so many hundred Thou miles.”
            You really should switch to rechargeable batteries; you’ll save a lot of money and help the environment.

            “Where do all these batteries go???????”
            They are recycled at EOL.

          • 0 avatar
            porschespeed

            The gigafactory is not even at 50%. It is not bigger than everyone else combined. Not to mention by the time it actually is up to 100%, it will be maybe 20% of world production. That’s just plants in process, not unannounced. See the previous link I posted.

            Solar panels do not follow Moore’s Law. They follow Swanson’s Law

            https://en.wikipedia.org/wiki/Swanson's_law

            Were solar cells anywhere near Moore’s Law, we would have solar everywhere.

          • 0 avatar
            VoGo

            Musk claimed that the giga factory was bigger than all other capacity combined in the media event introducing the 3. I honestly haven’t seen collaboration, but don’t spend much time thinking about it.

            Swanson, Moore – these are all experience curves – the issue is not what they are called but the slope for a given industry. The slope for solar and wind been sufficient that they are taking over electricity production in this generation.

          • 0 avatar
            porschespeed

            Musk claims whatever, doesn’t make it true.

            Once again, this is all easy to find actual facts with the most rudimentary of google-fu – let alone knowing the subject you’re talking about.

            As for Swanson v. Moore, words, and curves, have actual meaning. Assigning one to the other in at least ignorant, and at most disingenuous and deliberately distracting.

          • 0 avatar
            VoGo

            The point is that the “laws” are just different slopes for the experience curve, something I’ve been using for 20 years. Lawson’s calculations on slope are different from others I’ve seen, which are much more steep.

          • 0 avatar

            Teslas batteries, after use in traction packs, go into their PowerWall and other stationary storage systems, which will provide another profit center for Tesla and for Solar City.
            When their capacity decreases significantly, the cells get recycled back into new cells. Lithium cells are fairly low-toxicity.

          • 0 avatar
            porschespeed

            Once again Vagoo, you believe obfuscation is somehow ‘fact’.

            It isn’t.

            A defined ‘experience curve’ is *exactly* what it is effen *defined* to be. So when you spout the name of something that is 100% factually incorrect, expect to be called on it.

            I know Moore’s Law. Solar cells have never followed Moore’s Law, despite the fact we’d all love that.

      • 0 avatar

        But Toyota hasn’t the will to do so.

    • 0 avatar
      don1967

      Quoting Tesla’s comments and projections while dismissing qualified third-party opinions as speculative is hardly “critical thinking”. If anything it adds fuel to the Koolade argument.

  • avatar
    Brett Woods

    GM could have been out front with advancing the EV-1 to hybrid as engeneer Alan Cocconi had wanted, and taking a loss for the first years. The EV-1 was a very advanced machine. But that was the road not taken. Toyota introduced the hybrid first instead and sold it at several thousand bellow cost for 4 years straight.

    GM was well in the black in those days, with its money making loans program and the “about making money, not cars” exuberance of the finance arm’s success. They were in a strong position at #1, later lost to Toyota. Suggestions are that as a public company with majority stakeholders “in the biz” – the ICE biz and the oil biz, the hybrid idea was squashed by the board in a decision that was not based on the merit of the car, or on feedback from the test cohort. Their decision was about going forward with a specific business model.

    Point being. A break-even or anywhere close can be considered a win for the Model 3. The only loss scenario, as in the pictures of DeLoreans sitting in Ireland, is if no one were to take them home.

    • 0 avatar
      wsn

      No, even if GM makes the right strategic decision, it will still lose.

      GM is simply inferior to Toyota in terms of engineering and management. There is just no way.

      • 0 avatar
        tedward

        I’d wholeheartedly agree on the management side, engineering…maybe not. Either way, Toyota, gm and vw are the big swinging d!cks (billions of inches) of automotive r&d. If any one of the 3 set their sights on a segment or technology they are more than capable of producing the goods.

        Id say bmw Subaru and mazda are the management gods, what they accomplish with so few resources is stupendous.

        • 0 avatar
          Carlson Fan

          “GM is simply inferior to Toyota in terms of engineering and management. There is just no way.”

          Toyota’s strength is not engineering, it’s manufacturing.

  • avatar
    FreedMike

    Well, of course Tesla will offer the loss leader model for $35,000. And maybe they’ll sell some…just like Ford sells some “starting MSRP $26,000” F-150s too. If those $26,000 F-150s were all Ford could sell, I doubt they’d make much off the line.

    Realistically, this is a $45-50,000 car out the door with the options most people will want.

  • avatar
    APaGttH

    Of course they can’t money at $35,000 – that’s why they won’t be $35,000.

    Oh I know, but if you follow the pattern of S and the X, the 3 will be available for $35,000 for a month, and then it will be available for $43,000 with a slightly larger battery and 30 miles more range.

    They killed the $57K version of the S in the crib, they never met their price goal on the X and killed the lowest price model just a couple of months out of the gate.

  • avatar
    Pch101

    The more cars that Tesla makes, the more money that it loses. That’s not exactly the ideal result for a manufacturing company.

    I’ve said before that (a) the Model 3 will probably not go out the door for $35k and (b) Tesla is betting heavily on the position that battery prices will fall considerably. I don’t see any reason to feel differently now.

    • 0 avatar
      VoGo

      I agree that the average transaction price for the Model 3 will be North of $35K, likely in the mid-40’s (just my guess). So what? Have any of you ever tried to buy a Porsche at anywhere near it’s starting MSRP?

      Lots of cars advertise a low starting price, and consumer who want options pay for them. This is standard practice in the business. Why is it that when Tesla does it, suddenly there’s an issue?

      • 0 avatar
        Pch101

        If the $35k car becomes a $45k car, there might be some very unhappy folks who put up deposits with the expectations that their car would cost $35k.

        • 0 avatar
          VoGo

          The deposit gives the right to purchase, not the obligation. If you don’t like the car at the price it’s offered, get your money back.

          Plenty of people walk into a BMW dealership expecting to get a 6 cylinder 3-series with Apple play and leather for $299/month — just like it says in the ad. But options cost extra.

          How would it be any different if the Tesla 3 is a stripper for $35K, and the one you want is $45K?

          • 0 avatar
            Pch101

            If the $35k car is $45k, then that would be a classic bait-and-switch, which is borderline illegal.

  • avatar
    shaker

    If the first Model 3’s off the line are optioned to $42,500, the still-available tax credits will bring the effective price to near 35k (depending on state incentives) – but no one knows how many 3’s will qualify for the full $7.5k before the reduced tier kicks in.

    Somehow, this figures into the plan – the first owners will likely be the “happiest” with their cars, but then…?

  • avatar
    Jack Denver

    So here is an ex-GM man with no access to Tesla’s internal information. He makes various (and already contradicted and in any event unknowable) assumptions about what will happen in the future regarding (1)Tesla’s battery cost per kwh (2) the capacity of the Model 3’s batteries (3) the material composition of the Model 3’s chassis and based on these assumptions he “proves” that there’s no way they can break even at $35K. If you make enough assumptions, you can “prove” that my grandmother was a trolley car.

    Regarding (1), battery costs have been falling. Tesla’s whole existence is based on the idea of driving down battery costs. I don’t know whether they will be able to do it, but for Bereisa to just assume that battery costs will remain static at $190/kwh is pretty weak sauce. If he “assumed” that their battery cost would be $200/kwh then they would lose even more money. But assumptions need to be based on something and not just pulled out of thin air or some other part of your anatomy. It would be more honest to say, “I don’t have access to Tesla’s internal cost data and I have no idea how much their batteries will cost a year from now”, but that wouldn’t be a news story.

    Once you realized that he has no real support for his (1) assumption, the other two become irrelevant, but anyway, he makes guesses about (2) and (3) which Tesla immediately denied. Now maybe by some miracle he guessed right (and they would have to be guesses since he has no access to Tesla internal information and the Tesla spokesman (who does) is lying but I doubt it.

    So, boiled down, the story is “Man with no information makes uninformed wild ass guesses about Tesla.” Now this doesn’t mean that his conclusion is not correct but if it is, it is purely by luck.

    As many others have pointed out, the Model 3 is supposed to “start” at $35K. It’s a timeless custom in the auto industry for actual OTD prices to average much higher than the price of the stripper/loss leader. So even IF by some miracle Bereisa guessed right on Tesla’s costs, this still doesn’t mean that they are going to be losing money.

    So stated another way, the story is “Man invents fictional #s A, B and C and when he compares them to fictional # D, Tesla loses money!”

    Now maybe Tesla really is a great big Ponzi scheme anyway, but Bereisa’s “data” doesn’t really prove it, or much of anything.

  • avatar
    Alfisti

    IMHO the established manufacturers suddenly releasing a swathe of electric cars is not a threat to Tesla, it’s exactly what Tesla needs.

    They gain mass market acceptance and just watch the roll-out of charging stations if the big boys get involved.

  • avatar
    slap

    The 3 won’t be shipping in large quantities until 3 years from now. By that time the cost of batteries will have dropped.

  • avatar
    ckb

    Way too late to the party but I just want to point out we are fast approaching the 8th birthday of the TTAC Tesla Deathwatch (5/19/08 – 12/11/08, R.I.Google). In celebration here is a poignant quote from the final Tesla Deathwatch written by the man himself

    “TTAC won’t be hovering over Elon Musk’s minions vulture-like, waiting for the latest insult or injury.”

    Guess that was a few EICs ago so it probably doesn’t apply anymore. Anyway, this post did provide some insight such as chassis material (not Al) and current battery costs so thanks for that. Carry on!

    • 0 avatar
      porschespeed

      Be as late as you want – it’s still a frakkin’ deathwatch.

      The company is a cash-furnace that bleeds money from every orifice. It’s run by a self-absorbed South African twat who believes that being the beneficiary of ‘good stock-grant’ fortune is somehow “genius”.

      The carnival-barker and his apparatchniks have never turned an actual, you know, profit. He has a bunch of room-temp IQ ‘techies’ who are so stupid they actually believe the lies he is peddling.

      It’s a vanity project, not a business.

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