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Originally Posted by Fat Charlie
Tesla's more like a factory outlet charging boutique prices or a farmer charging airport snack bar prices, while GM's stuck selling at wholesale prices to boutiques and snack bars. They multiply this advantage by being a bit more expensive than Chevy: they send the lower end of the "affordable" electric market to the Chevy dealer, letting them deal with tire kickers and hagglers while keeping the "here, take my money" customers for themselves.
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Big manufacturers don't exactly let their cars go for cheap to the dealerships; most of dealer profits come from upselling options and accessories, financing, insurance, maintenance, etc. It's like Best Buy bringing the customer in by selling TVs for close to their cost, while selling HDMI cables for a 2000% markup along with "Black Tie protection" insurance.
I don't know what Tesla's profit margins are, but a new company needs an injection of capital as soon as possible to be competitive with established players. Elon was upfront about his tiered plan to start with a high cost, low volume model and work towards reducing cost and increasing volume.
Elon heavily invests his own money into the projects he believes in, and gives credibility to what he states is his main objective:
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to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible. If we could have done that with our first product, we would have, but that was simply impossible to achieve for a startup company that had never built a car and that had one technology iteration and no economies of scale.
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I'm sure Elon is a competitive guy and wants to be a success, but it seems clear his main objective is to advance the safety and well-being of humanity when he makes his products open-source.
If the Model 3 comes in at $35k before federal incentives, then it also represents the "budget" end of the EV market when the Leaf, with a 100 mile range goes for $33k, and the BMW i3 for $40k.
Elon Musk: 'Profits are Not Our Primary Goal' | Inc.com