Thread by @jpr007

OBSERVATION OF THE DAY 20210523

Economics Of Tesla Model 3

The Blue line on this chart gives us a very simple way to think of the economics of the Tesla Model 3 :

Market Price = €20,000 + €100 x Power in kW

- and note that this number INCLUDES Tariffs and Delivery Charges

Clearly this is just an observed empirical outcome

- but we can impute various things from it

1. The launch of production at Giga Grünheide should allow Tesla to reduce prices by more than 10% just from the elimination of Tariffs and reduction of Delivery Charges

2. This could imply a revised formula for an equivalent European-made vehicle, before counting any other savings :

Market Price = €19,000 + €90 x Power in kW

3. A 200 kW vehicle would then price at €37,000

4. A 150 kW vehicle would then price at €32,500

5. Now reduce the size and weight of the vehicle by 30% for a "Europe Model 2" :

Market Price = €13,300 + €90 x Power in kW

6. A 150 kW vehicle would then price at €26,800

7. We are now within striking distance of a €24,000 vehicle

- and the battery will be the key

8. €90 per kW suggests that the price of Power is €9,000 per 100 kW

- which includes the electric motor, inverter, gearbox, and all the second-order effects including larger batteries and BMS and bigger cabling

- and this number is at the Revenue level, NOT at the cost level

9. Innovations in vehicle design and production like front and rear castings, structural battery packs, and improved wiring harnesses can be expected to reduce that baseline €18,000 Price component

10. And ongoing improvements in motor / inverter / gearbox / BMS / cabling can be expected to reduce that variable €90 per kW Price of Power component