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Originally Posted by Efthreeoh
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Originally Posted by Agni
The response I expected from scott26 was something like: "Not to worry BMW will have an appropriate answer to Tesla soon". These responses just prove how unprepared and ignorant BMW is. I really hope BMW gets its act together because I love what the brand stands for.
Additionally, people fail to realize that the Gigafactory is going to give Tesla unprecedented efficiencies of scale in their supply chain. BMWs CFRP plant in Washington will not help much, they need to work on driving the cost of batteries down. Let's also not forget about that supercharging network, another obstacle competitors have to overcome.
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The current Model S sells for an average transaction price of $100,000+. As of the year ending 2015, Tesla has not made a profit on any sale of any Model S, which count at the end of 2015 was 64,000 units in the US and an additional 30,000 units for OCONUS, for a total of around 100,000 sales worldwide. 18 months ago the Tesla website was offering a $10,000 battery pre-purchase program for a replacement battery at the point when (if) the original battery fails (I haven't looked lately if Tesla still has the battery program). Even if one assumes that the $10,000 replacement battery is sold a $0 profit, which it is not, reducing the battery cost by gaining 100% efficiency in battery production only reduces the cost of the battery by $5,000. So this means that in order to produce a Model 3 for an average transaction price of $42,500 (Elon's stated number) Tesla somehow has to increase the efficiency of the Model 3 production by nearly 100% to get more than $60,000 out of the production cost of the Model 3 over the Model S.
At the Tysons Corner Tesla store sits a bare Model S chassis (floor pan) to show off the battery design. The chassis is, from a design and production perspective, really a work of art. From my eye, with a background in manufacturing engineering, it is beautiful to look at. It is also very expensive to produce. It is made entirely of aluminum: large and complex castings, extrusions, stampings, all welded together, truly beautiful to look at; but also tell tale of why a Model S costs $100,000. My understanding is the Model X is based off the Model S architecture. The Model X was supposed to come in at a base price some $10K to $15K lower than the Model S; it didn't. Unless Tesla comes up with a completely different chassis design and production methodology and materials use (aluminum is far more expensive than steel) for the Model 3, gaining that much cost efficiency over the Model S production has to be on the order of what Henry Ford did with the Model T by developing the moving assembly line for unit production and constantly improving the efficiency of it. Even at 400,000 pre-production reservation agreements and Tesla's implied unit sales of the Model 3, getting $60K out of the production cost is a seriously tall order for the company. I'd love for Elon to do it, hopefully he has people working for him who can figure it out, because it will definitely have to be unprecedented, and it will not come all out of the battery cost. |
As true as is it that tesla has not made a profit on the model S, it is not to say that the model S doesnt make a profit per sale (purchase price greater than cost), it is only to say that full operation cost of the company as a whole is greater than profits on the whole, the profit per car is largely speculation bc tesla does not divulge that info. Everyone knows it is higher volume that makes these companies profitable. Of course teslas challenge will be to scale up production and deliver on the big promises of the model 3.