Tesla Model 3 is now entering the European market and it is making some automakers nervous. According to a new report, Porsche and Audi reverse-engineered Tesla’s new electric car and they were quite surprised by its cost.

It’s somewhat common in the industry to purchase vehicles from competitor to see what they are up to, but it also becomes a necessity for vehicles that are seen as important disrupters.

The Model 3 appears to fit the description as it apparently outsold all other premium sedans combined in the US.

During the early production ramp up, it was difficult to get your hands on a Model 3, but some automakers paid a pretty penny to be amongst the first to be able to check out the new electric car.

About a year ago, two Model 3 vehicles were spotted on their way to Germany – presumably to be reverse-engineered.

Later, a report came out about a German automaker being impressed by Model 3 after reverse-engineering it.

Now a new report from Germany’s Manager Magazin (German and paywall) includes a deep dive into the state of Audi with comments from executives and insider sources.

It claims that Porsche and Audi, who are working together on a next-generation electric platform, had to change their approach because the cost was too high compared to what Tesla is achieving.

They report:

“The Porsche and Audi engineers have to change [the PPE] because Tesla’s Model 3 has gotten better than they thought.”

The next-gen platform called Premium Platform Electric (PPE) was greenlighted almost two years ago and it is expected to be ready around 2020 or 2021.

According to the new report, the first version was coming at about 3,000 euros too expensive, which Porsche is said to be able to absorb but Audi wasn’t on board. They believe that they need to lower the cost in order to be competitive with other upcoming EVs.

The battery cell cost is apparently the biggest factor that pushes the cost of the platform higher and Tesla claims to be leading the industry on that front.

According to the report, Audi and Porsche could delay the PPE in order to improve the cost and be competitive with Tesla.

The PPE is becoming increasingly important for Audi according to Manager-Magazin’s report, which describes a failing e-tron program:

The e-tron as the first electric Audi is not only late. It does not reach some target values and has become far too expensive with more than two billion euros in development costs. The approximately 600,000 cars sold for the break-even are now regarded as an illusion.

The e-tron electric SUV was supposed to be delivered to customers last year, but Audi says that software issues have resulted in delays.

The German automaker is still planning several other vehicles based on the same platform before the PPE becomes available.

Electrek’s Take

We often hear complaints about Tesla not yet delivering on the base $35,000 version of the Model 3, which I think is fair, but we still need to acknowledge that Tesla is the only automaker currently mass producing a compelling long-range EV and doing it profitably.

I think that’s what is impressing Audi and Porsche here and what they wish to emulate with the PPE platform.

A decade from now, I think we will not only look back at Model 3 for how the vehicle program accelerated EV adoption through volume but also for the impact it had on other automakers.

The fact that they were apparently 3,000 euros behind for a platform coming in another 2 years just shows how Tesla is far ahead.

As for the e-tron program, the report is worrying. I’ve been cutting Audi some slack over the delays for the e-tron SUV, but I’d like to see some volume soon.

We hear that the launch in the US is still planned for Q2 2019.

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