Researcher Claims Break Even Point For Tesla's Model 3 Will Be Around $41,000

That what i call sound reasoning.

Not.

A 'cash cow' the Model 3 is not!

Let's look at this another way - as of today, the Tesla market cap is about $50 billion.

The market cap of Ford is $44 billion and the market cap of GM is $50 billion. Both Ford and GM are legacy automakers with strong track records of being profitable. As long time automakers with a 'net' successful history, there is really no talk about Ford or GM selling the majority of its vehicles at a 'loss per vehicle'.

With Tesla, however, since it is the consensus (though not confirmed by the company) among the investing community that Tesla 'loses money' on most of the vehicles it sells - there is an implicit 'subsidy factor' built into the market cap - such that effectively (as money is fungible) investor money is subsidizing the price differential between what it costs to manufacture and market the vehicles and the actual selling price.

Let's make an assumption that Tesla loses $10,000 on every vehicle it sells. Tesla has sold about 175,000 Model S (2012 to Mar 2017) and 37,000 Model X (2015 to mar 2017) for a total of 212,000 units.

Simple math tells us that if the $10,000/vehicle loss is true, about $2.1 Billion of debt and/or equity money has gone to subsidize vehicle sales.

It would be nice to know from Tesla what the real 'loss per vehicle' number is and if its possible for consistent profitability to be possible.

"The market cap of Ford is $44 billion and the market cap of GM is $50 billion. Both Ford and GM are legacy automakers with strong track records of being profitable."

News flash: Ford CEO Mark Fields was ousted today 5/22 for poor performance. All those profits don't matter much eh ? Mary Barra is next.

They are taking a wild guess based on the Bolt, a completely different type of car. It might be mid 30K at full production (500k/year) and economies of scale. The 2018 models will have a higher cost per unit.

As for average sales price, Musk referenced $42k. An Electric survey for reservation holders put it around $50k with Dual Motor and Performance models. Many will do software upgrades to Autopilot and full Autonomous driving when that is available, adding a $3-8k upside depending on how those upgrades are priced. You also have the Tesla Network launching in 2018 or 2019 that will give Tesla a 10% slice of car sharing revenue on existing cars. Overall gross margin should hit 20% easily if the true cost is $41k. At mid 30s, it will be more like 30% (which is the real target btw for all their products).

Why is the lead photo a Hyundai Elantra?

The author makes a lot of wild assumptions. The Bolt just rolled out and the production ramp-up will be relatively slow. Fixed costs are amortized over volume. If the go from 50,000 cars this year to 300,000 cars in two years their cost will decline.
And to HenryN, Mary Barra is not next. Her financial performance is outstanding. Part of Ford's issues stem from not taking the government in 2009 so that they have more debt on their books.

This is the state of Ford's affair according to its own chairman: “Bureaucracy and hierarchy overwhelmed what could be faster decision making,” Ford said. “The clock speed at which the world is moving, and our competitors, really requires us to make decisions at a faster pace… And we have to trust our people to move fast. It’s not command and control.”

GM is known for an even bigger bureaucratic machine than Ford. Its stock has gone down since 2013, even during the past few golden years with record sales and all. It only takes a small tumble in the market for GM to suffer the same fate as Ford. The smart money would not stick around with these companies if all they can show for are meager dividends and declining value.

Mary Barra is next, may not be today or tomorrow, but not for long.

*taking the government buyout.

*bailout.