Can Tesla & # 39; s Model 3 be profitable?

A new demerger of Tesla's Model 3 agrees with others who have suggested that the vehicle is a technical triumph, but disagrees as to whether the vehicle can be profitable at the much-discussed selling price of $ 35,000.

The dismantling, carried out by an engineering team for UBS Securities LLC, praises and criticizes Model 3 at the same time and calls it "the dream of an engineer, but the nightmare of an accountant".

"The dismantling employees loved the powertrain and emphasized next generation and military class technologies for peers," UBS wrote in the recently released survey. "However, the excitement did not translate into major cost savings."

A new UBS disassembly suggests that Tesla will lose $ 5,900 for each Model 3 that sells at the base price of $ 35,000. (Image source: Tesla, Inc.)

The engineering team, working in the UBS Evidence Lab, compared Model 3 in many ways with two competing vehicles: a Chevy Bolt 2017 and BMW i3 2014. "Tesla delivered the best powertrain," said the study. "(Tesla) powertrain had the best power, torque and acceleration."

The study also noted that the battery costs of Tesla were $ 178 / kWh, compared to $ 205 / kWh for the Chevy Bolt. Reasons mentioned for the lower cost of Tesla include the fact that the pouch cells of the Batteaccu needed more metal and polymer housings. UBS also said that Tesla integrated the temperature registration systems with greater success than the GM Bolt.

Nevertheless, the study concluded that a $ 35,000 version of the car would not yield a profit for the electric car manufacturer. "We assume that the basic version would lose about $ 5,900 per car at $ 35,000," the authors wrote.

Disagreement about profitability

From a technical perspective, the UBS study is similar to the results of a disassembly performed by Munro & Associates earlier this year. After that demarotation, CEO Sandy Munro said his company's engineers were amazed at the technical quality of the Model 3. "If you look at the electronics in this car, the density is out of this world," Munro said during an interview "The layouts are great, the fact that they have integrated different disparate circuit boards … this is like a symphony of engineering."

But Munro reached two separate conclusions about the potential profitability of the vehicle. In April he said the vehicle could not be profitable at the base price, and said that "$ 36,000 Model 3's will be rare as pigeon teeth." In July, however, he returned and said that Model 3 could earn more than 30% profit per vehicle. "I have to eat crow," he told "I did not think this would happen like this, but the Model 3 is profitable."

Munro & Associates told Design news this week that it would have more to say about this in mid-September.

The UBS conclusion, on the other hand, makes an already obscure picture of the profitability of the Model 3. Numerous media articles have recently suggested that Tesla is struggling financially, partly as a result of the manufacturing of snafus on Model 3. And in May, Eles Musk, the CEO of Tesla, to the confusion when he tweeted that $ 35,000 versions of the Model 3 would be shipped at that time, would cause Tesla to "lose money and die". He added that he would need three to six months after reaching production levels of 3,000 to 5,000 cars per week, only for Tesla to stay alive.

Regardless of profitability, the main finding of the UBS disassembly may be that the engineering behind Model 3 might be even better than expected. The UBS Evidence Lab praised the vehicle for the integration of many of its components, but in particular the inverter, electronic engine, gearbox, charging electronics, battery management and more. "Model 3 seems to have been built with the aim of simplifying engineering, removing components and building things as modularly as possible," wrote the authors.

Senior technical editor Chuck Murray has been writing about technology for 34 years. He joined Design News in 1987 and covered electronics, automation, fluid power and car.

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