Tesla Model 3 Reportedly Costs $28,000 To Produce

Tesla is burning through cash and having problems hitting production targets but it appears the Model 3 is pretty profitable for the company.

Speaking with engineers who tore down a handful of Model 3s for German automakers, WirtschaftsWoche reports the team discovered the car costs around $28,000 to build. This includes $10,000 in production costs as well as $18,000 in materials as well as other expenses.

Considering the $35,000 base model isn’t available yet, Tesla appears to be making a pretty hefty profit on every Model 3 they sell. WirtschaftsWoche says part of this profitability is due to the car’s advanced battery pack which uses significantly less cobalt than competitors. This is important as electric vehicle demand has reportedly caused the price of cobalt to triple in the last year and a half.

How this was achieved remains unclear but the publication says Tesla and Panasonic have figured out a way to use about two thirds less cobalt than traditional batteries. This significantly reduces costs and will help aid profitability.

One of the engineers echoed this sentiment as he told the magazine “If Tesla manages to build the planned 10,000 pieces a week, the Model 3 will deliver a significant positive contribution to earnings.”

While it appears the Model 3 is profitable, not everyone is convinced the margins are good enough. Quartz spoke to Erik Gordon, a professor at the University of Michigan’s Ross School of Business, who suggested Tesla isn’t actually making much money on the car when other expenses – such as dealership costs and planned factory expansions – are factored in. He contends if Tesla isn’t selling the Model 3 for at least $50,000 then “I don’t think it’s a good business.”

  • caddy45

    Pretty good margin based on the production & materials costs alone, but curious how long it’ll take them to recoup R&D costs for the switch to the new battery tech. I’ve got to assume that cost a pretty penny.

  • Spyder Hole Fantome

    So these alleged ‘engineers’ in Germany that tore down a 3 are suggesting how much it costs Tesla in California to produce a Model 3? Really?? Where do these articles come from??? I mean, perhaps these engineers could be off by 90%? 290%? How the bloody hell do they know??!!

    • 2sfhim

      I’m sure you are more clever and you know more things than these specialised engineers.

      • Moveon Libtards

        Yup, the same “specialized engineers” who cant even figure out how to produce a simple sedan? How many times has the Model 3 been delayed?

        Yup, ok…

    • brn

      You’re getting some understandable criticism, but it is a good question. So many articles and “studies” are based on questionable expertise. Can we get a better understanding of the qualifications of those that performed the analysis and what the result of that analysis really was? Far too often the media is selective about the portion of the study they choose to publish. It’s very difficult to take such claims at face value.

      Btw: I did click through to the referenced article. That article referenced another article. That article required me to register to read. Bah!

  • Moveon Libtards

    Poor Tesla cant even make its cars let alone sell them.

    Engineers and executives leaving the sinking ship by the droves…

    What a joke.

  • Moveon Libtards

    Tim Cook failed miserably at Apple (look at all the boring products under his helm) and is leaving the company as a result.

    Bad analogy.

  • EyalN

    When VW design a new car they calculate the cost of developing the car. This is why Lamborghini are using Audi parts and Bentley are using Skoda parts.
    Developing model 3 cost about a billion dollars so they need to sell each car for $150000 to make profit selling the cars

    • Bash

      Bentley using skoda parts, I understand what you trying to say, but on that bombshell I call it a day.

    • Brent Morrison

      They are all using VW parts

  • Daniela Wolf

    28 000$ + employees + management + Musk + advertisement + logistics + ….. = ?

    Tesla wants a margin of 10% + . This does work ? Tell me.

  • Brent Morrison

    How about warranty repairs… Lol

  • Arthur Burnside

    According to Tesla’s own words, the battery pack alone for the base Model 3 costs $11,400 for the cells plus all of the paraphrenalia costs – figure at least $13,000. And these “experts” claim that all of the car’s components only cost $18,000????

  • Arthur Burnside

    The battery pack alone, according to Tesla’s own words, costs $11,400 just for the cells. And these morons are claiming that the total material costs are only $18,000.
    You don’t have to be an expert to see how incredibly stupid that claim really is.

  • Arthur Burnside

    Musk himself claimed that selling the Model 3 for $35,000 would bankrupt his company. I’d say Musk knows a bit more about the production costs of his Model 3 than those “experts.”

    • Or that’s what he wants you to think.

      Excellent business strategy either way.

  • Alaa

    That will be the selling price not the cost. I say this because Panasonic will do away with Cobalt. Thus the price of the battery will drop dramatically. VW BMW MB etc have no chance to catch up now.

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