Thread: Tesla Model 3
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Old 07-19-2018, 02:30 PM   #468 (permalink)
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Originally Posted by redpoint5 View Post
I don't doubt you know more about auto manufacturing than me. That said, I stand by my point that increased volume is the pathway to profitability, not idling production capacity.
The tent assembly line is not a real assembly line. It is 100% manual assembly of the vehicle using humans. Pallets of parts on the ground, 80/20 workbenches, and batch manufacturing identical vehicles. See attached picture.

So there is no expensive machinery to idle. The tent is just a massive increase in variable cost necessary in order to reach the 5000 vehicle target. It is necessary because the highly automated line inside the building isn't working as intended.

Originally Posted by redpoint5 View Post
This is all speculation, but it seems Tesla can break even selling the stripper version of their Model 3 for $35k, and any options at all should return a marginal profit.
You seem to have skipped some key parts of that article:

"But Munro’s manufacturing costs for the Model 3 don’t include everything. Design time for engineers to develop the parts, sales and dealer distribution, marketing or any of Tesla’s “selling, general and administrative expenses” aren’t included. Munro’s figure essentially just considers the material and labor expenses needed to manufacture the vehicle.

I asked Munro & Associates how profitable a cheaper Model 3 might be, but spokespeople told me that the 30 percent margin can’t necessarily be used to extrapolate what the margins are on cheaper Tesla Model 3s like the mystical $35,000 one, mostly because the components may be different. “The problem with trying to figure out what the lower trim model costs, is: What does it have?” James Hadley from Munro told me.

He said it can be fairly straightforward to crunch numbers on the difference in cost based on kilowatt-hours of the lower-capacity battery, but devising cost for the car without the Premium Trim package would be hard. “What kind of functionality are they taking out? What kind of materials are they taking out for the lower trim model?” he continued. It’s for this reason that Munro & Associates says it’s hesitant to give any figures about the profitability of a cheaper Tesla Model 3 trim."
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