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Tesla Model 3 Teardown Reveals It’s Relatively Cheap To Produce
5 H BY STEVEN LOVEDAY 18
With CEO Musk’s recent Tweets about Tesla Model 3 production costs and release of certain variants, this new information is even more compelling.
We hear time and time again that automakers are losing money on EVs. Some people believe that an actual dollar amount is lost or absorbed every time an EV is sold. It’s not that simple. There are so many variables involved here when factoring in development costs, volume, etc. It’s a huge, tricky math problem that’s not so easy to comprehend.
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With this being said, Tesla CEO Elon Musk’s recent Tweets about holding off on lower-priced models until volume is higher – so Tesla doesn’t die – makes perfect sense. For a myriad of reasons, as production increases, the automaker should be able to more easily turn a reasonable profit on less expensive trims. Now, a German firm that specializes in vehicle teardowns has put a number out there.
The German company recently spoke with WirtschaftsWoche. An engineer shared:
If Tesla manages to build the planned 10,000 pieces a week, the Model 3 will deliver a significant positive contribution to earnings.
In fact, it was revealed that the materials and logistics involved in building the Model 3 add up to about $18,000. Labor costs were determined to be about $10,000. This may not include some of the other factors that we spoke to above, but it’s pretty telling, nonetheless. It correlates well with Musk’s recent Tweet confirming that Model 3 production cost could definitely come down to ~$28,000 once production reaches 10,000 units per week.
Definitely
— Elon Musk (@elonmusk) May 31, 2018
The teardown expert also made references to battery cells. The 2170 cells used in the Model 3 battery pack are made up of only 2.8 percent Cobalt. The industry average is 8 percent, which means the Model 3 battery pack requires 65 less percent Cobalt than the average. Being that the material is hard to come by, this may give Tesla another advantage. Managing Director of Batterien-Montage-Zentrum (BMZ) Sven Bauer said:
That would be a significant competitive advantage for Tesla. Cobalt is currently very difficult to get on the world market.
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18 Comments on "Tesla Model 3 Teardown Reveals It’s Relatively Cheap To Produce"
I hear they saved a bunch on the 12 volt charging system. Sorry, I couldn’t resist. 🙂
One by one the shorts arguments are disappearing:)
“Cheaper to make than most think”
When I look at the Model 3 I think it looks really cheap to make. Look at the interior design. Flat simple dash with no buttons, symmetrical left to right. Nothing looks really difficult to form.
Electric drivetrains are pretty simple, and it sounds like they have made it simpler to make. Power comes for free with larger batteries.
The battery is the expensive part.
Also, Musk stated that they significantly improved the cabling (communication, high-voltage, low-voltage) architecture so that the Mod3 requires only a fraction of the cabling the ModS requires.
Yes, the cutbacks in electric are obvious… No heated seat controls for rear seat passengers, they have to ask the driver to make adjustments for them in the touch screen… Thats not a good solution…
Or they can just implement voice control for the same thing through an OTA “Dave”.
You like so many, are constantly constraining yourself with you lack of thinking outside the box.
haha! So voice control for the rear seat passengers… tell me how that works.. “Be quiet everyone..”. “Hey Siri, I am in the Left rear seat, can you increase the seat heating 1 notch”
I’d rather just reach up over and set it myself… quietly, and without having to ask everyone in the car to be quiet… I-Pace you can control your heat, fan, and seat warming function from the back seat. Or if is is kids, parents can disarm the rear seat controls. .
This was just done for cost cutting , and it sucks… IMO
haha! So voice control for the rear seat passengers… tell me how that works.. “Be quiet everyone..”. “Hey Siri, I am in the Left rear seat, can you increase the seat heating 1 notch”
I’d rather just reach up over and set it myself… quietly, and without having to ask everyone in the car to be quiet… I-Pace you can control your heat, fan, and seat warming function from the back seat. Or if is is kids, parents can disarm the rear seat controls. .
This was just done for cost cutting , and it sucks… IMO
They shouldn’t, leave the controls to the driver, for safety reasons. If the car ever becomes autonomous then you could do that.
Tesla’s are not going to be autonomous anytime in the near future. That is 5 years to a decade away, first they have to stop running into emergency vehicles, and barricades, high speed automatic emergency braking would be a nice start.
Disagree on this one… Leaving that out, was just cheap, and not a good option.
Since 99% of the cars on the road don’t even have a REAR seat heating system I think we will be ok.
Actually I cannot name any EV that does not have rear seat heating… Bolt, Volt, and Leaf all have it
Buttons are actually not very expensive, but I agree on the rest. Especially compared to the S and X(!!) it’s a pretty simple car to build.
“…it was revealed that the materials and logistics involved in building the Model 3 add up to about $18,000…”
Fun fact – they teared down a M3 with the large battery pack AND premium options (because that are the only ones out there). So a standard one for 35,000$ with the small battery and without the premium options should be even cheaper to make!
Ok let’s do the math. 10,000/7 days a week = 1428 per day. If they ran the plant 24/7/365 days straight (not possible) that would be 60 cars per hour, or 1 each minute coming off the line. FACT- The same Fremont plant production rate was 8100 per week at peak production when it was run by the super proficient Toyota production management system.
“Cheap to produce” Isn’t it what Elon said from the beginning?
$28K at 10K units a week is not “cheap” to produce. This does not include operational cost of Tesla which runs about 30% of revenue last Qtr, and also some return on Capital investment. That is 60% of average revenue for “cost of goods sold” ouch…