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Tesla Model 3: what battery cost/kWh is needed for vehicle profitability?

Photo credit: gobi.man via Instagram

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8 years ago

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As the Tesla Model 3 nears production and the first deliveries in July, the big question investors are asking is “Will Model 3 sink the company or take it to new heights?” The latest episode of Teslanomics reverse engineers new data around vehicle production costs and per kilowatt-hour battery costs, in an attempt to understand if and when Model 3 will be profitable.

Tesla shared in the 2017 Q1 investor call that it had improved margins on its vehicles to 27%. While the company disrupts not only the automotive industry but the energy storage and energy production industries, analysts have been scattershot in their estimations of Tesla’s current and future valuation.

Teslanomics took cost/kWh data from an anonymous source and combined it with assumptions for Model 3 battery size, to find the approximate cost/kWh required before Model 3 can be profitable. First, host Ben Sullins took the industry average that the Total Produced Cost of the vehicle should be around 40% of the sale price of the car. Electric cars are a bit different as batteries typically make up 50% of the total production cost of the vehicle.

Ben then created a model that calculates the % of the overall vehicle price that the battery represents. Based on discussions taking place across forums, it’s widely speculated that Model 3 will be offered with two different battery pack sizes – a 55 kWh and 70 kWh battery pack at a vehicle price of $35,000 and $42,000, respectively. Based on those assumptions, Ben was able to reduce the per kilowatt-hour battery cost until the total produced cost of the vehicle reached approximately 50%.

While this analysis is not water tight, nor was it intended to be, it does add a valuable data point to show that Model 3 can be profitable, especially once Tesla’s Gigafactory is in full production and battery costs reach $130 per kWh and below. Tesla is expected to announce details for Gigafactory 3, 4 and 5 by the end of this year.

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I'm passionate about clean technology, sustainability and life. I've worked in manufacturing, IT, project management and environmental...and enjoy unpacking complex topics in layman's terms. TSLA investor. Find more of my words on my website or follow me on Twitter for all the latest. Tesla Referral link: http://ts.la/kyle623

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Tesla rolls out new, more affordable trim of the Model Y Juniper in U.S.

Two months after launching the new Model Y with the Launch Series, Tesla has brought out an All-Wheel-Drive configuration of the ‘Juniper’ build.

Published

20 minutes ago

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April 4, 2025

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Credit: Tesla

Tesla has finally rolled out a new trim level of the new Model Y “Juniper” in the United States, bringing a more affordable option of the revitalized version of its best-selling vehicle to market.

On Friday, Tesla officially launched the Long Range All-Wheel-Drive version of the new Model Y in the United States. Before the $7,500 federal tax credit, the configuration starts at $48,990.

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Just a few days ago, we reported on Tesla ramping up production of non-Launch Edition configurations of the new Model Y at Gigafactory Texas. While the company initiated sales of these trim levels in other countries, the U.S. was still waiting for more affordable options to become available.

The Launch Series version of the new Model Y had 327 miles of range, a top speed of 125 MPH, and a 4.1-second 0-60 MPH acceleration rate. The Long Range All-Wheel-Drive trim of the new Model Y has nearly identical specs: it offers the same 327-mile range rating with the same top speed of 125 MPH. However, it has a 4.6-second 0-60 MPH acceleration rate.

The Launch Series also came with Full Self-Driving included. The new, more affordable trim does not, so owners will have to pay $8,000 for FSD if they’d like to purchase it outright. There is also a monthly subscription service that costs $99/mo.

Now that the new Model Y has a new, more accessible configuration available and Tesla has already started ramping production, this could be a good sign of things to come for the company as Q2 kicks off.

Tesla reported lower-than-expected delivery figures for Q1 earlier this week, with the company stating that the shutdown of production lines to changeover to the new Model Y design impacted “several weeks” of manufacturing.

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Inventory levels for Tesla were also high, as production outpaced deliveries by a margin of nearly 22,000 vehicles. This could be due to the number of units that have not made their way to delivery centers quite yet, but more information on this will likely be shed by Tesla during its earnings call on April 22.

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Investor's Corner

“Nothing Magnificent about Tesla (TSLA),” claims Jim Cramer

Cramer shared his thoughts about the matter in a comment to CNBC.

Published

3 hours ago

on

April 4, 2025

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Credit: Tesla

Tesla (NASDAQ:TSLA) is one of the stocks in the “Magnificent Seven,” which is comprised of U.S. tech companies that have driven notable market growth. But as per finance veteran Jim Cramer, electric vehicle maker Tesla no longer qualifies for the group’s moniker.

Cramer shared his thoughts about the matter in a comment to CNBC.

Not “Magnificent” Anymore

The Magnificent Seven (Mag 7) stocks are comprised of Apple, Microsoft, Amazon, Alphabet, Meta Platforms, Tesla, and Nvidia. The companies are known for their large market caps, innovation, and domination in their respective fields. As per Cramer in his recent comments, however, there are essentially no Mag 7 stocks anymore amid the fallout of U.S. President Donald Trump’s tariffs.

“You can buy some low multiple techs, industrials, and banks here. We did that for the charitable trust today, right under the teeth of the selloff. I would not jump back into the Magnificent 7 because, as of tonight, there is no ‘Mag 7’ anymore. I came up with that name, and I’m scrapping it right now — no moniker fits the two or three that remain viable. And I’m not going to put it out there — there’s nothing magnificent about Tesla or Nvidia,” Cramer noted.

Trump Tariffs

Donald Trump’s tariffs are expected to affect a variety of industries, including automakers like Tesla. Despite this, Tesla’s domestic factories such as Gigafactory Texas and the Fremont Factory should shield Tesla to some degree. As per TD Cowen analyst Itay Michaeli, “Tesla (is) a relative beneficiary given [its] 100% U.S. production footprint, substantial U.S. sourcing, and with Model Y competing in a midsize crossover segment where close to ~50% of vehicles could be subject to tariffs.”

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Elon Musk, however, has noted that the effects of Trump’s tariffs to Tesla are no joke. “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial,” Musk wrote in a post on X. 

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Elon Musk

Tesla is building a new UFO-inspired Supercharger in the heart of Alien country

Published

23 hours ago

on

April 3, 2025

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Credit: MarcoRP | X

Tesla is planning to build a new UFO-inspired Supercharger in the heart of Alien country — Roswell, New Mexico.

Back in 1947, a crash of debris led to rumors of an alleged crash of a UFO just 75 miles north of Roswell near Corona, New Mexico. The crash was officially noted as the recovery of a military balloon, but over the years, speculation persists that the “flying disc” many saw might have been extraterrestrials trying to make contact with Earth.

As a result of the 1947 crash, Roswell has adopted it and used it as the inspiration for much of its tourism. As Tesla is planning to build a Supercharger in the area, it is using the same sort of inspiration for the location, which will feature just eight charging stalls located under a CyberCanopy.

It was first spotted by MarcoRP, a noted Supercharger permit insider:

Here are some better pictures of the design:

Tesla’s Head of Charging for North America, Max de Zegher, confirmed that the site will be inspired by the events near Roswell in 1947. He noted that Tesla “wants to build a few Superchargers cool enough to be worth of the trip itself.”

This will undoubtedly be one of those locations, and along with the Tesla Drive-in Diner Supercharger in Santa Monica, it seems the company could be moving toward some more unique designs for the future, making the charging experience more fun and interesting for owners:

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