Tesla will lose money on $35,000 type 3

Buyers waiting for of which long-promised $35,000 Tesla type 3 sedan probably shouldn’t hold their breath.

After UBS recently pulled apart a type 3 along with compared its quality along with estimated costs with two competitors, UBS analyst Colin Langan said he thinks Tesla will never be able to make money at the $35,000 the company originally planned to charge for an entry-level type designed for the masses.

“This kind of car needs to sell inside the low $40,000’s to break even, along with I think they’re a long way via the 25 percent growth margin target, unless they can sell the idea well over $50,000,” Langan said Tuesday on CNBC’s “Power Lunch.”

UBS hired a team of engineers to pull apart three different electric cars to compare their technology along with production costs: a fresh Tesla type 3, a 2014 BMW i3 along that has a 2017 Chevy Bolt.

The team examined a $49,000 2018 type 3 along with were “crazy” about the powertrain, “highlighting next-gen, military-grade tech of which’s years ahead of peers,” Langan said in a note dated Aug. 15. although the costs were higher than expected, along with the cars would certainly lose about $6,000 each at Tesla’s original plan to sell an entry type at $35,000, he said.

the idea will be another sign Tesla may have trouble turning into the mass-market automaker the idea said the idea wants to become.

Plans to manufacture the lower-cost vehicle have been delayed since its announcement in 2016 as the electric car supplier received a struggled to meet demand. CEO Elon Musk said in May of which manufacturing the type 3 at of which cost “right away” would certainly cause Tesla to “die.”

Instead, Tesla focused on higher-cost versions of which yield better margins, along with of which move may help Tesla post the profit inside the third quarter of 2018 Musk said he expected. The cheapest type available at This kind of point will be $49,000, along with buyers can add options of which hike the cost up to $80,000. Langan estimated the profit margin on the $49,000 type UBS tore apart was about 18 percent.

The problem will be those prices aren’t sustainable for a midsize sedan like the type 3, Langan said. Even though the type 3 will be a battery electric, Langan said at least some of its buyers will also be shopping midsize sedans with internal combustion engines of which are priced inside the mid-$40,000 range, such as the BMW 3-Series.

The UBS engineers gave a breakdown of each car’s powertrain along with battery, electronic controls, frame along with body as well as Indoor along with safety features. They evaluated each part’s design, ease of manufacturing along with cost.

Tesla beat its two competitors in cost, although the type 3 didn’t have as big a lead over the different automakers as UBS had expected. However, some of the type 3’s technology seemed to be far ahead of of which found on the Chevrolet along with BMW. In particular, Tesla’s electric powertrain stood out as exceptionally simple along with flexible.

UBS based its estimates on consultations with engineers along with industry research.

Tesla was not immediately available for comment.

Chevrolet along with BMW did not comment on the original UBS report.

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