Tesla will miss their Model 3 $35,000 target price, but not for *that* reason

Tesla will likely miss their $35,000 target price tag for the Model 3 due in 2017 or so. But not because the batteries cost too much, or production costs are too high.

Rather, demand will be what keeps prices higher.

It is my opinion that the demand for a 200+ mile range, well-designed, luxury Tesla EV will be so huge that Tesla simply raise the price to match demand with what they can supply. It might end up happening in a similar way to how Tesla cancelled the 40kWh version of the Model S. It might be bad PR, they might shrug their shoulders, but its smart business.

The initial roll out in 2017 or 2018 won’t feature vesicles at the $35,000 base price tag – in the pattern of the Model S and Model X launches, we’ll see the highest margin units go out first – signature, largest battery pack, AWD, supercharging, for around $50,000. It will be 6 months or more until they can start offering the lower priced cars (probably around 40K) that are the standard battery pack and trim levels.

Maybe after a year or so, they’ll get around to making the lowest margin units. But even then I don’t believe that Tesla will sell their base model for $35,000. Its likely that they wont get down to that point until about 2020 – after initial demand has been satiated and the Gigafactory is running full steam producing battery packs below $200/kWh.

One thought on “Tesla will miss their Model 3 $35,000 target price, but not for *that* reason

  1. Brad NaPier

    Your comments regarding Tesla are interesting. I agree that Tesla and Panasonic will make the gravimetric, volumetric and cost improvements that will allow an electric car to be cheaper to make and use when compared to an ICE. Last week Musk briefly reported that they are using silicon in their new anode. I believe that their current battery pack cost about $160 per KWh. Switching to the the 20700 form factor will decrease cost by 30%. Slow evolution by adding silicon to the anode and eventually graphene will continue to improve the metrics of their battery.. The title of your posting implies that you also believe battery improvement is already sufficient to make the $35,000/200 mile model E. I would be interested in your opinion.
    Thanks, Brad NaPier

    Reply

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