Tesla Model 3 teardown points to only $28,000 in potential material and production cost

Several Tesla Model 3 vehicles were bought by competing automaker engineering firms to try and to learn about the technology.

Earlier this year, a German automaker was reportedly impressed by the Model 3 after having reverse-engineered it.

Now, another German firm has reportedly completed a teardown of the vehicle and came up with an impressive potential cost for Tesla’s latest electric vehicle.

German magazine WirtschaftsWoche spoke with one of the engineering firms who bought Model 3 vehicles on the used market to benchmark and tear them down.

They claim that their cost analysis resulted in materials and logistics costs of $18,000 and labor costs of $10,000 for a total cost potential cost of $28,000.

A test engineer for the firm said that he believes the Model 3 could turn out to be quite profitable:

If Tesla manages to build the planned 10,000 units a week, the Model 3 will deliver a significant positive contribution to earnings,

This analysis counters previous reports that suggested the cost could be closer to $35,000, which happens to be the base price of the standard version of the Model 3.

The firm also claims to have figured out the percentage of cobalt inside the Model 3 battery cells: 2.8 percent.

That’s significantly less cobalt than in similar battery cells from the competition and confirms what Tesla recently claimed in its shareholders letter and ‘Conflict Minerals Report’.

Update: Tesla CEO Elon Musk said that he agrees with the analysis:

Definitely

— Elon Musk (@elonmusk) May 31, 2018

Electrek’s Take

I would take this with a grain of salt since it seems quite a bit low – though it sounds like their cost analysis is linked to Tesla achieving a production rate of 10,000 units per week, which is not expected until next year.

Tesla CEO Elon Musk recently said that the automaker couldn’t currently produce the standard Model 3 at a profit, but they expect to be able to do so later this year after they achieve a production rate over 5,000 units per week.

Musk previously said that Tesla was aiming to ultimately achieve a 25% gross margin on the Model 3, but it appeared that it was mainly dependent on high margin options like the Performance version, the Long Range battery pack, and the Autopilot packages.

The analysis would point to Tesla almost hitting a 25% margin on a standard $35,000 Model 3 without any upgrades once they hit 10,000 units per week.

I doubt that it will be the case, but I would love to be wrong on this because many people in the auto industry are still hoping for the Model 3 to be unprofitable to show that you can’t mass produce long-range electric vehicles yet.

What do you think? Let us know in the comment section below.