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What Is Going On With Tesla's Model 3 Battery? And What Does That Mean For Tesla Profitability?

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What Is Going On With Tesla's Model 3 Battery? And What Does That Mean For Tesla Profitability?

The Model 3 may not be as profitable for Tesla Motors Inc (NASDAQ: TSLA), according to Jon Bereisa, CEO of Auto Lectrification. Bereisa is said to have estimated Model 3's factory variable cost (FVC) to be $1,510 above its base price of $35,000, read a report on Electrek.

Bereisa, the former chief engineer of General Motors Company (NYSE: GM)'s Chevy Volt program, reportedly sees the Chevy Bolt's FVC at $4,980 below its $37,500 starting price.

Related Link: Is Tesla Killing U.S. Gas Demand? Not Quite

The report quoted UBS analyst Colin Langan as saying, "Bereisa's Model 3 estimate cost breakdown adds up to the vehicle being unprofitable for Tesla."

According to the report, "Bereisa based his analysis on the base Model 3 being offered with a 60 kWh battery, like the Bolt, and on Tesla achieving a cost of ~$190/kWh. He estimates that Tesla's current battery pack cost (cells, casing, cooling and entire pack) is at $260/kWh, while GM's is at $215/kWh."

The report added that Tesla's vice president of investor relations, Jeff Evanson, stated that Tesla's battery pack cost is already below $190/kWh and the base Model 3 will be offered with a battery pack option smaller than 60 kWh.

Shares of Tesla were down 1.01 percent to $251.17.

Latest Ratings for TSLA

DateFirmActionFromTo
Apr 2019NomuraInitiates Coverage OnNeutral
Apr 2019Morgan StanleyMaintainsEqual-WeightEqual-Weight
Apr 2019Canaccord GenuityMaintainsBuyBuy

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