Model 3 Teardown Reveals Tesla Is Making A Boatload Of Cash Off Of You

Munro was man enough to say “a lot of crow (was) being eaten around here,” - which includes himself. Who's a man on this site ?

His first report was one on build quality and as such was 100% accurate. If build quality goes out the window, then profit is easier to achieve if people will buy the product.

I can't speak for someone else's experience, but mine has been as good or better than other cars I had purchased. As I mentioned before, the design is "take it or leave it". Materials do feel "cheap" compared to a Jaguar or a Porsche but are perfectly comparable to BMW 3-series or a C-class, certainly better than a Mustang or a Camaro (I had/have owned all of the cars listed here). As for build quality or performance, I have no absolutely problem.

As for you, what experience do you have on the Model 3 ? did you let your bias speak for you ?

I've been up close and personal with three of them and was utterly appalled that what I was seeing was a $60K car. It would be embarrassing as a $30K car. Wavy panel gaps. Misaligned bumpers. Doors that do not shut with the same force. Rattles.

I've seen 3. All three had vile build quality.

While I appreciate the opportunity to see the inside of the car and hear what experts have to say about it, I don't care much about the style of the presentation and the sensationalism. These guys are selling their report, not really talking about the Model 3.

So, the gentleman says the Model 3 is profitable at the "Gross Margin" level. For the non-accountants out there : here are the different types of profit margin:

Gross Profit Margin, Operating Profit Margin, and Net Profit Margin:

Gross profit is derived after subtracting a company’s cost of goods sold (COGS). COGS is an aggregate expenses from direct labor, raw materials and other overheads costs such as utilities (e.g. power bill of a manufacturing plant)involved in the manufacturing of products. The gross profit margin is able to tell us whether companies have control over supply costs and/or whether they have a strong product differentiation which allows strong pricing power.

Gross Profit Margin (GPM) = (Revenue – Cost of Goods Sold) / Revenue

Operating profit margin, also known as EBIT (earnings before interest and taxes), operating profits show the residual earnings after subtracting out most of the fixed costs (i.e. staff costs, rental expenses, advertising & marketing costs, research & development costs). As a company with a large economics of scale grows its sales revenue, fixed costs should become a smaller percentage of total costs and operating profit margin should increase

Operating Profit Margin (OPM) = (Gross profit – selling & distribution costs – general administrative costs) / Revenue

The bottom-line. Net profit measures the profitability of a business after accounting for all its costs. Its net profit margin would indicate how much after-tax profit would a business make for every dollar of revenue generated.

Net Profit Margin (NPM) = (Operating profit – interest expenses – tax expenses) / Revenue

UNANSWERED QUESTION - Can the Gross Margins from Telsa's vehicle sales, 'cover' all the costs of retail sales, service and distribution (i.e. which are paid for by traditional manufacturer's dealer networks). Related - how are the costs for Solar City and the Supercharger network covered long term?







, this means that production of the vehicle and sale at list price should generate

It would not take many LONG DISTANCE TOWS for warranty service to cut that Gross margin substantially.

Good post.
Small correction though: the dealers network does not pay for anything. It is either the car manuf. or the customer who pays.

Build quality is fine on the new ones.

Fine as in OK as in passable as in no longer literally mediocre?

If this true it means that Tesla should be profitable on the base model once they get the rest of their expense structure under control. It also means established auto competitors can match this gross margin, sell at lower prices than Tesla and still be profitable at lower levels which meet their shareholder expectations. Tesla shareholders are expecting Apple levels of profitability which exceed the auto industry. Price will be used as a weapon against Tesla.