Tesla Can't Make Affordable Model 3 Cars - Company Will "Lose Money and Die"
The media has lately been catching up to what Torque News first reported back in December of 2017 - That Tesla had been misleading the media, fans, investors, and order holders for the Model 3. On Twitter, at promotional events, in comments to investors and others, Elon Musk had for years been promising a "$35K starting price" for the Model 3. The problem is, the Model 3 starts at around $50K because Tesla won't build one with a lower price for order holders.
Now that the cat's out of the bag, and every news organization worthy of the name has woken up and recognized Tesla's deceptive pricing promises, fans and others are starting to ask why, after nearly a year of deliveries, Tesla hasn't started to build the car he hyped, and continues to hype, as "affordable."
In July of 2017 when the Model 3 deliveries first began, the New York Times and other media happily played along with the ruse. The NY Times quoted Musk as saying then, "The whole point of this company was to make a really great, affordable electric car. And we finally have it.” But is a Model 3 that costs twice what a Chevy Volt or Toyota Prius Prime sells for really "affordable?" Was the Model 3 that thrifty Consumer Reports purchased for $59K "affordable?"
Asked on Twitter this week why Tesla hasn't lived up to its promised $35K starting point, and only builds cars for customers that cost than 50% more than that, Musk replied. Here's the exchange.
Elon can you please release some news on the standard battery..
When would people be able to order the 35$ version of the model 3?
Great specs on the AWD version.
— Ivaylo Ivanov (@ivanovi_ivaylo) May 20, 2018
The answer to why Tesla hasn't built the car at the price point that it promised, in Musk's words, is "Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live."
With production, 1st you need achieve target rate & then smooth out flow to achieve target cost. Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live.
— Elon Musk (@elonmusk) May 21, 2018
This isn't rocket science. It's what many folks pointed out long before Tesla thought of the Model 3. Affordably priced battery electric vehicles are unprofitable. Only super-expensive compact EV cars selling in the $50Ks to $80Ks, or large luxury-performance sedans and minivans selling from $85K to $170K make financial sense. Once Tesla sells enough of the pricey Model 3 trims, the newest of which will cost buyers $84K, Tesla will throw a small handful of buyers a bone and build some Model 3 cars at a loss so it can pretend that the cars really do "start at $35K."
ps - With Tesla's mandatory destination fee that even buyers who take delivery at the factory pay, the real imaginary base price is $36K, but who's counting?