Tesla Unnecessarily Losing Money on Model 3

Not that Elon Musk will listen, because the Tesla CEO seems convinced he knows everything, but the founder of Munro & Associates knows how the California automaker is losing money on the Model 3. The stupid part is Tesla doesn’t need to be losing these profits, if it listened and implemented some fairly simple changes.

The big takeaway here is that Sandy Munro told Bloomberg the Tesla Model 3 costs $2,000 more to manufacture than the BMW i3, even though the two cars sell for about the same price. As Munro said, Tesla isn’t learning from past mistakes of other automakers, but instead stubbornly pushes ahead with inefficient designs, burning money needlessly.

One example: the Model 3 rear wheel wells have nine metal components joined with welds, rivets, etc. In the Chevy Bolt the rear wheel wells are a single stamped piece of steel, shaving production costs. According to Munro, the bodies are where Tesla is burning up cash. That’s hardly a surprise, considering the astronomical cost of body repairs for Teslas after an accident.

Munro isn’t all negative on the Tesla Model 3. He says the fully-loaded version could offer a fat 30 percent gross profit margin, while the base version could still squeeze out 10 percent. That should be music to the ears of Tesla, which has struggled financially, but would require some sacrifice and humility to achieve.