Model 3, what it is worth to $TSLA

This analysis is just as bad as the rest of the stuff on this blog.  So let’s start with percentages going to different types costs in producing a car as that of the MSRP price of ICE car (sticker price). Here it is…PC-Manufacturing-Cost-Structure.jpg

If we sum up the costs roughly attributed to generally manufacturing like “Raw Mat’l”, “Procured Parts”, “Internally Produced Parts” and Inbound Logistics” as the cost of the parts from which a car assembled then we get 48.7% of sticker price, then add “Manufacturing”, probably meaning assembly.  At that point we look at 61.5%. The German Estimate was $18,000 for parts and $10,000 production cost. This is comparable to ICE sticker price that would be $45,500.  “Product Development and Overhead” in this model accounts for 8.5% if you enter this into the cost structure then you get even 70% to be the cost for “Factory Gated” Tesla Model 3.  Indeed, this is the 30% Gross Margin. Wow, right on the money!  What an accounting feat, such a precision! The other costs include the OEM profit margin (7%), being a Dealer (10.3%) and Marketing (10%).  We are after the Profit Margin so let’s leave it alone for now.  Let’s set being a Dealer makes 10% of the sticker for TESLA, Direct marketing has been outsourced to Mr Hype, Ms. Save The Planet and Mr. Elon Musk twitter account (0%).

At this point profit per Model 3, @ $45,500 sticker price, is $8,950. But, but there is the fly in the ointment …..

If we compare efficiency of $TM Toyota and $TSLA as number of cars per employee then we get this:

$TM  cars made worldwide ~8,900,000 / 364,000 employee = 24.5 cars/employee

$TSLA cars made ~180,000 (assumption, full year) / 30,000 employees = 6 cars/employee

The model above takes into consideration decently run company like Toyota.  People who work are required to eat, sleep and rest but this costs money so $TSLA pays them at least 4 time the money per car Toyota does.  If we identify labor at 8% contribution to all costs and 1 percent of sticker price is at $455.25 (the quarter killed $TSLA) ergo additional cost to TSLA is $10,920 (didn’t I tell you about that quarter?).

In this half-assed (technical term) assessment even before financials are taken into considerations there ain’t no money in it for $TSLA (-1,970), are there any for you?

No wonder, that after exhausting all options to jack the price up Mr. Elon Musk might come up with better and improved Model 3:  Model XXX.  We are waiting with baited breath!

Just don’t, It isn’t worth it!

Only $3 Bills Accepted


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