Elon Musk Admits That Tesla Can’t Make The $35,000 Model 3 Yet

Tesla chief executive Elon Musk has admitted that the company still isn’t in a position to build the long-promised, $35,000 Model 3.

While speaking with members of the press shortly after Tesla posted just the third quarterly profit in its history, Musk said the entry-level Model 3 is still roughly six months away.

“If we can produce the $35,000 car today, we would do it. But there is more work to do before we can make $35,000 car, and have it be positive gross margin. We’re probably less than six months from that,” he said.

Musk went on to say that the company’s recent introduction of a Mid-Range Model 3, priced from $46,000, was conceived as a step towards the $35,000 model, Forbes reports.

“We are trying to provide most affordable electric car options that we can. And since we just don’t have the ability to get to the $35,000 car right away, we thought this [the medium range version] might be a way to offer it as an intermediate step.”

To make the base Model 3 a reality, Tesla is focused on cost optimization and improving the yield of its production lines to bring manufacturing costs of the Model 3 to $30,000 or less.

In the third quarter, Tesla delivered 56,065 Model 3s in North America, generating $6.8 billion in revenue and securing $311 million in profits. The company also revealed that it is looking in margins greater than 20 per cent for the Model 3 thanks to the lowered cost of raw materials and by limiting the numbers of hours needed to build the vehicle.

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  • Bruce K

    Something is not right with those revenue figures. If they got $6.8 billion in revenue & sold 56,065 model 3’s, that works out to over $121,000 each. So then the 6.8 billion must include non-model 3’s as well. But even at that, it doesn’t make sense. Does the revenue include other things besides their car sales? it’s certianly not just model 3 sales, which is sort-of implied here.

    • kachuks

      Asking 400k customers for a deposit, asking suppliers to give back cash payments kinda helps. Couple that with employees forced to work 12hr. shifts, pulling in extra help from the S and X lines, all under a makeshift tent and you wonder if this empire isn’t built on a house of cards.

    • Astonman

      The more cars they make, the more pollution credits they can sell. I don’t recall the exact number from the report I read a couple of days ago. been trying to track it down. But they sold about over a $1 billion in credit. They have been surviving on this for the longest time. That’s why the math doesn’t add up just based on car sales.

  • TheBelltower

    I don’t know why Tesla would bother with the 35k version until they’ve accommodated customers who want the more expensive Model 3’s. They haven’t even started with oversees customers yet.

    • Dude

      The market for cheaper cars is larger I assume

      • TheBelltower

        It is. And it won’t be going anywhere anytime soon. Tesla needs to sell as much expensive, high-margin stuff as they can before selling the cheaper stuff. Eventually Tesla will be able to sell all versions, plus the Model Y, once their production capacity expands.

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