Presuming a modest 10% discount from the march of progress and 30% from the GF decreases their current $190/kWh pack cost to 190*0.7*0.9 = $119.7
Originally, the 30% would be coming from the fully operational GF, which won't be complete until 2020. However, I would imagine if they started to be able to make cells by the end of this year, the entire process would be vertically integrated so the costs from all the middle men would be eliminated. The rest is just scaling up for more output. In 2017 I'm not sure they can reach the 30% because after all the GF hasn't reached its maximum yet. But something like 15-20% wouldn't be unthinkable.
Or the 30% includes the march of progress.
Nothing at all wrong with that opinion. Speculation is encouraged! I would, however, strongly suggest you read the Forbes article by Bob Lutz that I linked to in the first post.
As I said before, under is under. Tesla Motors was reported to be under $180 per kWh barely a couple of months after some 'expert' claimed it would be IMPOSSIBLE to see even $183 per kWh prior to 2022-2024. And that was in 2014!
Yadda, yadda, yadda... It costs money to employ people. Big deal. Better to do so and pay them well. Fremont is not going to be a sweat shop. Tesla Motors will need happy employees who are capable and willing to work lots of overtime. Many of them will be cross-trained to work multiple places at the facility. They will work for the company, hopefully for several years, not solely for the Model ☰. During this period of constant growth, attributing labor costs to a specific vehicle is not appropriate.
Warranty costs for a vehicle manufactured at around 50,000 units per year are bound to be higher than those for one that will reach 500,000 per year. Attempting to balance the budget of warranty service for the first 10,000 cars as if the same amount will be needed for the 3,500,000+ you intend to build over eight years. And when you consider that traditional automobile manufacturers attempt to reuse components from their respective parts bins of older cars in newer cars means their cost is lower. The less they cost, the less you have to set aside as funding for warranty service. Tesla Motors is building that inventory of parts for the very first time right now. And most warranty service on the Model S has been for rather simple things such as the alignment of seals at windows or wear on the threading for the seats.
That is a fair way of looking at it, I simply disagree. I got the impression he meant that relative to the very first cars off the line. It is undoubtedly open to interpretation, though.
The difference between profitability and bankruptcy can be a thin one. Considering what has happened thus far, I would not fault Tesla Motors for going much further into the red in the short term in order to build the ship that will sail them into more profitable waters. I believe that Tesla Motors has the expertise to make that happen.
And there we have it. You just want to criticize Tesla Motors for the sake of doing so. You will never accept, or allow, or admit that anything they do, can do, or will do is in any way viable. If they work to expand, you will say they are being 'irresponsible'. If they stop and rake in the cash, you will call them 'stagnant'. YOU CANNOT HAVE IT BOTH WAYS! And either way, you will claim they are doomed to failure. C'mon, MAN!
Why in the bloody [HECK] would I presume Tesla Motors were going out of business BEFORE the Model ☰ comes to market? There would be no reason for me, or anyone else to be spending time in these forums if that were the sole point of conversation. YOUR assumption, presumption, or determined position that SHOULD be the case is utterly ridiculous at the very least.
And YOU can't 'just assume' that the company will GO OUT OF BUSINESS! NEITHER can you you 'just assume' that the Model ☰ would be designed, engineered, and manufactured with the express purpose of being UNDERWATER from the outset! That would be DUMB!
Oh, great...
They'll be fine on this front. Even if average annual improvement is only 5% they'll be under $100 per kWh in only six years. If they average at closer to 9% per year, they'll be under $100 per kWh in only three years.
The difference is that the little Honda motor produces at best around one third the horsepower and maybe a sixth of the torque of the electric motor while still getting worse relative fuel economy in a vehicle that weighs at least 3,000 lbs less. Drop that same 600cc motor in a TLX, ATS, 3-Series, or A4 and it would get absolutely TOASTED by the Model ☰ in every conceivable Performance category. By comparison? A BMW 320i engine is around $8,800 at retail. Even if you presume the manufacturer's cost is 1/3rd of that amount, it is still $2,933. Six times as much as the $500 you noted.
I'm pretty sure Elon has Foxconn and similar suppliers on speed dial for circuit boards and whatnot. Tesla Motors has multiple facilities now. I would not doubt that several components are built in-house, even if not on-site at Fremont. Raw materials go in one end of the building, cars roll out the other.
The fact of the matter is that a BMW 320i is no better appointed than a Toyota Camry LE. Tesla Motors will not have a particularly high bar to get over here. Just because the seats may be 'cheap' doesn't mean they will be substandard. Aside from the Recaro seats they get from Johnson Controls, others are manufactured by Futura across the street from Fremont.
Yadda, yadda, yadda... It costs money to employ people. Big deal. Better to do so and pay them well. Fremont is not going to be a sweat shop. Tesla Motors will need happy employees who are capable and willing to work lots of overtime. Many of them will be cross-trained to work multiple places at the facility. They will work for the company, hopefully for several years, not solely on the Model ☰. During this period of constant growth, attributing labor costs to a specific vehicle is not appropriate.
Idunno about that. I'll check when I get a chance. But that seems incorrect to simply 'cut in half' on a per car basis, when Production is destined to be manufactured at a faster rate. Especially since they have only manufactured over 50,000 vehicles once so far.
So, why are you applying this to profitability on the front end? That seems like an operational expense. Not a budgetary concern for Production or Sales.
Other cars in the segment typically charge $995 or so as a Destination Fee. Why include this in the cost of the car, if you already know a separate fee, above and beyond the cost of the car, will cover it? That makes no sense.
Yeah, and mysteriously, by subtracting all four of the last bogus charges you attributed, that $38,000 amount becomes...? $29,400. And that just happens to represent a 16% margin for a $35,000 car. Geez.
You can believe that. I disagree. I believe that if at all possible, Elon would work it so that their margin on the base $35,000 car would be 25% from the very outset. Then, he would fight tooth and nail to deliver a version that had a $30,000 base price instead, so he could accept a 12.5% margin on it.
The ONLY year that will see less than 100,000 of the Model ☰ built is 2017. Once again, I direct you to the link in the original post to a Forbes article by Bob Lutz. You do not determine the profitability of a car by the first few that roll off the line. You just admitted in your own final paragraph the very thing I have been saying all along -- Tesla Motors costs will go down with time. The only difference is I see that as improving their margin above and beyond a starting point of 12%, while you see it as a means to eventually reach that level of profitability, or close to it.
I'm not assuming they will go bankrupt. Otherwise I would sold my shares of TSLA long ago. I'm not assuming anything, simply trying to deduct the costs of various components to arrive with a semi-educated conclusion. From this reply I can see your knowledge of how Tesla works has room for improvement. Read their 10k filings, especially on how COGS are calculated and what the actual numbers are then we can have a better discussion on the same level.
Y'know, I only just noticed you were using the term 'net profit'. FYI...? That is total, complete, absolute, friggin' [BORSHT].
No. That might match BMW's annual output of the 3-Series alone, but no... Tesla Motors would not be as large as BMW -- they will be opening a 320,000 unit facility in Mexico for the X3 alone next year. And let's face it, the Model S will probably triple the sales of the BMW 7-Series this year in the US. I'm sure they could get cow hide and camel hair from any supplier they wanted for whatever price they liked.
Yes. It is that optimism, that is continually doubted by well reasoned, wizened, well-meaning Naysayers the world over, that has thus far proven to be CORRECT where it matters. The Model S sold over THREE YEARS WORTH OF CARS in 2015 alone! Everyone thought he would have been lucky to sell half as many units as the disappointingly ignored Mercedes-Benz CLS. I like optimism. It allows a lot more to be done than pessimism ever will. It is because I pay attention to 'the history of Tesla' that I know... Elon Musk said he expected a 12% to 15% margin in THE VERY SAME CONVERSATION where he stated the $35,000 price point! So, yeah... I kinda think it is very likely he was talking about their initial expected profit margin, not some possibly hoped for late future happenstance of good fortune.
And my point disagrees with this by leagues. The very act of DECIDING to build a car in mass market quantities means from the outset that you can count on economies of scale to reduce price points. The very act of BUILDING a Gigafactory removes the single biggest impediment to doing so with an electric car. If Tesla Motors were thinking of building 3,000 cars over the course of three years, as Toyota is doing with the Mirai, then yes, their costs absolutely would NOT go DOWN.
Once again, it appears you either are unaware, or you are accusing Elon Musk of being a liar again. He has said for at least two years that initial, immediate benefit of the Gigafactory would be at least a 30% improvement in cost. It is NOT necessary for the Gigafactory to reach 100% output. Just building the batteries there alone will achieve the 30% minimum reduction in Tesla Motors' internal cost.
It would be more accurate to say the US would have a balanced budget if we didn't go into hock with international banks every year just to pay blood money to the armament industry to the tune of multiple trillions to keep them from giving the 'good' weapons to our enemies at a steep discount -- because it has nothing to do with the military at all.
Oh? Have you taken a look at annual sales for Rolls-Royce recently? How would you term their status?
You can't draw any conclusions about motor costs comparing an ICE with an electric motor. An ICE is massively more complex. OTOH the materials for an electric motor might be more expensive.
Based on their statements they will definitely be there by the end of 2017. Your being surprised isn't relevant.
Plus a "moderate, not small not large" improvement due to cell chemistry.
Except that contradicts his own statements. He has stated,explicitly that believes that Tesla will eventually make a 25% profit across the board.
This article says that commodity copper currently costs ~ $2.5* USD a pound, and ~ 140 lbs of copper are in a garden variety EV.
The answer is pretty obvious... They don't have a whole boardroom full of folks telling them that it can't be done, why it shouldn't be tried, and when they'll be fired if they do.
Oh, so true! The term 'badge engineering' is bound to sink to new lows. Especially when it comes to Fiat/Chrysler, I think.
