Tesla Model 3 at $35,000 is currently impossible, says Elon Musk – probably under 6 months away

Tesla CEO Elon Musk admitted yesterday that the automaker still can’t deliver the promised base Model 3 at $35,000.

He reiterated that it is still their goal and tried to provide a new timeline – along with a timeline for the international expansion of the Model 3.

During the conference call for Tesla’s third quarter financial results, Musk said:

“If we could produce a $35,000 car today, we would do it. We need more work, there is more work to do before in order to make a $35,000 car and have it be positive gross margin. We’re probably less than six months from that. That’s our mission.”

Tesla was previously guiding deliveries for the base version of the Model 3 in as soon as 4 months, but it now sounds like it could be delayed again.

As we reported yesterday, Tesla managed to deliver a surprisingly high gross margin on Model 3 during the last quarter.

But the improvements in profitability for the electric vehicle are not substantial enough to enable the promised base price yet.

When asked why Tesla announced a new Mid-Range Model 3 instead of the $35,000 base model, Musk said:

“Well, we’re trying to provide the most affordable electric car options that we can. And so as we can – we just don’t have the ability to get to the $35,000 car right away. We thought this might be a way to offer it as an intermediate step. And that’s really it.”

Tesla CFO Deepak Ahuja said that they still need further manufacturing efficiency improvements and more economies of scale in battery production in order to deliver the base Model 3 with a profit.

Tesla also plans a redesigned battery pack around the $35,000 model which should offer more cost savings rather than repurposing a bigger pack which Tesla is doing with the midrange model.

A 6-month timeline would put the first production at the end of Q1 or the beginning of Q2.

As for Model 3 coming to Europe, Tesla said that they plan to open the order book to reservation holders by the end of the year.

Musk added that they plan to build a significant batch of Model 3 vehicles for Europe in January.

He said that he expects deliveries in February and March:

“We expect to start producing a significant volume for Europe in January, and obviously take some time to ship. So deliveries, probably if we finish the deliveries in Europe kind of in the late February, March timeframe.”

Musk added that right-hand drive markets, like the UK and Australia, can expect the car in “Mid 2019.”

Asia-Pacific (APAC) can expect the car closer to the main European timeline. Musk said:

“We may or may not deliver cars in APAC in Q1, but certainly in Q2. It will be kind of borderline as for whether we can deliver in APAC by the end of Q1. So I can’t say for certain, they’re definitely in Europe, and then definitely in APAC in Q2.”

These are now the best timelines we have for the base version of the vehicle and expansions in new markets.

Tesla also aims to increase its Model 3 production rate by that time in order to more quickly respond to the demand.

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