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$28,000 To Build A Tesla Model 3, And How

The Tesla Model 3 is estimated to use cost just $18,000 in materials and just $10,000 to actually build, a new analysis by German paper WirstschaftsWoche reveals. The analysis assumed a production rate of 10,000 cars per week, which is the second major milestone that Tesla has set out for Model 3 production.

The Tesla Model 3 is estimated to use cost just $18,000 in materials and just $10,000 to actually build, a new analysis by German paper WirstschaftsWoche reveals. The analysis assumed a production rate of 10,000 cars per week, which is the second major milestone that Tesla has set out for Model 3 production.

The details of the teardown came from a German premium automotive manufacturer, which commented that even at the low prices it had from suppliers in eastern Europe, it would not be able to build a similarly priced vehicle today.

Interesting bits from the article highlight the specific areas where Tesla differentiated itself from traditional vehicles with the Model 3. For those who have been watching Tesla’s struggles with the Model 3 design and now production, these serve as validation of Tesla CEO Elon Musk’s relentless pursuit of simplicity and building a car for manufacturability.

The low-cost figure coming out of the analysis coupled with Tesla’s early lead in eating market share will surely serve as motivation for other manufacturers to follow suit with a revamping or at least a rethinking of vehicle design and the subsequent design of the manufacturing lines that assemble them. Will they be able to move fast enough? Is shining a spotlight on the risks taken by another company and sprinting towards where they just were enough to keep up?

Redditor MaChiMiB related a few more details from the premium version of the article that shed light on the specific improvements in the Model 3 that resulted in its impressive internal price tag.

Tesla went cheap on parts of the car that are purely functional, like the kick panels, and focused on building higher quality components in high-visibility or high-interaction areas, like the headliner and wood veneer dash. This is very much in line with what happens in traditional vehicles, so should come as no surprise.

Tesla’s relentless focus on simplifying the design of the car was a big driver of cost savings in the design.

¤ Much fewer possible configurations

¤ One touchscreen in the car for all controls

¤ Streamlined dash design

¤ Only 4 types of screws in the underbody compared to 40 from a similar German vehicle.

While these design decisions play to Tesla’s focus on beautiful simplicity, they also result in significant cost savings. Instead of designing, assembling and building the massively complex dashboards most modern cars come with today, Tesla has distilled the dash down to a very streamlined look that lumps all of the vehicle controls into a single touchscreen interface. While user feedback on the layout of the Model 3 touchscreen, including from Consumer Reports, indicates that it’s not perfect, it is a driver of cost savings that contributes to the lower cost of the vehicle relative to Tesla’s Model S and X.

Tesla has already reduced the cobalt mix in its battery cells to just 2.8%. This is less than half of the nearest competitor using a lithium-ion chemistry. This is huge, as Tesla continues to come under fire for its increasing utilization of the controversial conflict mineral, which comes largely from the unstable country of the Democratic Republic of the Congo. Additionally, cobalt is toxic, making any reduction in its usage a noteworthy accomplishment. (Aside from the link above, also see this story and this one for more on cobalt in EV batteries.)

Breaking the cost of the vehicle down across the various components reveals an unsurprising bulk of the expense being tied up in the battery:

¤ 40% Battery

¤ 14% Electronics

¤ 11% Suspension

¤ 11% Interior

¤ 10% High voltage motor

¤ 8% Exterior

¤ 7% Chassis

On the flip side of the analysis, the assumption that Tesla hits a 10,000/week production rate is roughly 4 times what Tesla is achieving today — though, some of its production departments are already moving along at rates far in excess of its current targets. It’s debatable when this will happen, as Elon and team are increasingly gun-shy about committing to firm dates and gates, but early data about the Model 3 production lines make it clear that 10,000/week is very achievable.

Source: WirstschaftsWoche (in English) via Reddit

 
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Written By

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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