Tesla Model 3 Material Costs at 18,000 Dollars

German weekly Wirtschaftswoche interviewed an analyst company specialized in reverse engineering cars. Several Tesla Model 3 have been shipped to Europe in the past months to disassemble them and analyze materials and costs.

According to one of those analyst companies the material and supplier costs are estimated to be around 18,000 dollars. Adding the estimated production costs of 10,000 dollars, Tesla is making a profit from each car, based on the base price for a Model 3 at 35,000 dollar.

Considering that the average price of the pre-ordered Model 3 is at 45,000 dollars, and also extrapolating expected production optimization, the Model 3 is profitable already today. So far analysts and competitors assumed that Tesla’s material and production costs are around the Model 3 base price.

As soon as Tesla overcomes production bottle necks, the Model 3 will be contributing to some handsome profit for the business. Today, the car is still a burden on Tesla’s balance sheet.

The analysts were astonished by the batteries. Tesla managed to reduce the cobalt percentage down to a third. Cobalt, which has seen a threefold price increase in the last 18 months, accounts only for 2.8 percent of the battery, instead of the 8 percent batteries required until now. For Tesla this is a breakthrough, which will give the manufacturer a not insignificant competitive edge.

This article has also been published in German.