- Tesla calls its Model 3 a “mass market” car, but Elon Musk compared it to a $US66,000 BMW.
- Model 3 base price is $US35,000 and won’t be available for at least another six months.
- Musk announced new features for the Model 3, including all-wheel drive and dual motors, which could push the price as high as $US78,000
- Follow Tesla’s stock price in real time here.
When Tesla unveiled its Model 3 last year, CEO Elon Musk hawked the sedan as an affordable car for the masses.
Fast forward 10 months and Musk is now comparing the “mass-market” Model 3 to the BMW M3, which has a base price of $US66,500.
“Cost of all options, wheels, paint, etc is included (apart from Autopilot). Cost is $US78k, Musk tweeted early Monday. “About same as BMW M3, but 15% quicker & with better handling. Will beat anything in its class on the track.”
Tesla’s base price for the Model 3, excluding any upgrades like the Autopilot assistance software, is $US35,000 on its website. Even that is on the higher-end of “mass market.” Basic, four-wheeled transportation can be had for as little as $US20,000 from traditional automaker like Ford and General Motors.
What’s more, the base model won’t even be available for at least another six months. “Shipping min cost Model 3 right away wd cause Tesla to lose money & die,” he tweeted. “Need 3 to 6 months after 5k/wk to ship $US35k Tesla & live.”
The comparison isn’t entirely new, but it is the first time Musk has publicly compared the car to luxury competitors. UBS analyst Colin Langan told clients in July that “with a price point with options likely in the low $US40k range, comps would include the BMW 3-Series & Mercedes C-Class.”
The luxury pricing, which could be as much as $US78,000, or more than double the base price Telsa has been touting, could help the electric-car maker shore up its margins enough to become profitable – something Musk has said will happen this year. Currently, the Model 3 has a “slightly negative” margin, the company told investors following the first quarter, and is eyeing a 25% profit on each car by the end of 2018.
Of course, that’s if Tesla can actually produce enough Model 3s. The company is planning a six-day stoppage of its Model 3 assembly line later this month, Reuters reported, in order to fix manufacturing issues and hit Musk’s goal of 5,000 vehicles per week coming off the line.
If Tesla is able to shore up production for the Model 3 and get margins to its goals, shares could reach $US500 Berenberg analyst Alexander Haissl told clients Monday. That would make for a 75% gain from current levels.
“From production bottlenecks to quality issues, consensus has largely dismissed the prospect of 25% gross margin on the Model 3,” Haissl told clients. “But the widespread assumption that Model 3 margins can be directly inferred from Model S/X is inherently almost totally flawed.”
Shares of Tesla rose as much as 4.6% Monday morning following Haissl’s note, but pared some of their gains after falling short of receiving Consumer Reports’ recommendation due to “big flaws.”
Tesla shares are down 11% this year.
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