Tesla's Missed Opportunities To Lower Cost and How Can It Finally Make the $35,000 Model 3
In order to make the $35,000 Model 3 available in the market Tesla has to make major component changes. Let's start with the powertrain.
Reduce battery size to 60KW this should lower cost by almost $3000 and still yield 220-mile rated range. Software add faster acceleration as a $2500 option across all models. Change aluminum wheels to steel wheels and hubcaps, and charge $1200 for aluminum aero wheels. At the same time Tesla could change the tires from all season to fuel saving tires to compensate for the added weight. 50% plus clients would add the aluminum rims. Reduce the interior components from a premium to a cloth interior, savings $1700. Change roof to a standard roof, savings $1000.
That's $6,900 a vehicle savings.
Minor component change
Change folding mirrors to manually folding mirrors, savings $200. Software disable homelink $200 add. Enable and charge for internet streaming $12.50 a month / $150 a year-. Change door and window trim from chrome to black plastic, savings $100.
$650 a vehicle, savings and profit
True economies of mass scale production of both Model 3 and Model Y. That's $500 a vehicle minimum for true mass production
Total Savings - $8050
Low and behold the $35,000 model 3. Let the production everyone has been waiting for, begin now.
Tesla's Missed Opportunities
Tesla could have easily disrupted the entire auto insurance industry.
With increased safety of enhanced auto pilot (EAP). Tesla could offer something no other auto manufacture offers, auto insurance. This is a multi-billion-dollar industry. Cheaper auto insurance offered solely to Tesla drivers could potentially synergize sales. Insurance is an industry ripe for disruption.
$500 a vehicle profits every year
Change base paint to a flat black matt finish without gloss coat, savings $500. Many customers would choose this option it looks futuristic. Many model 3 owners are not worried about factory color offerings. They choose to wrap their vehicles different colors in the aftermarket. Tesla could add factory window tinting, vehicle wraps, and ceramic coating. Adding a clear wrap to the front of the Model 3 is almost a necessity due to paint softness, and the model 3 bumper easily collects rock chips. One local car wrap store, touched up 47 rock chips over a 6-month course of driving before adding a clear wrap. Almost all Tesla drivers opt for 1 or more of these options. Tesla could easily add these multi-million-dollar services to its Service Centers.
That's another $500 a vehicle savings minimum and potential profit.
Tesla could reduce the price of autopilot software add on to $2500 across the board. Right now, approximately 40% of owners do not opt for autopilot software upgrade due to the $5000- $7000 price addition. A 90% (EAP) Enhanced Auto Pilot adoption rate helps Tesla and clients. At $35,000 it’s 1/7 the price of the entire car. If Tesla pushes out 200,000 model 3s and Ys a year, that’s an additional 500 million in revenue. If autopilot cars are 40% safer, then Tesla can boast the increased autopilot safety ratings across the entire fleet.
That's $1000 a vehicle profit, minimum.
Total missed opportunity profit gain.
$2000 a vehicle
Ludicrous car – Tesla vehicle sharing platform
GM and Audi are first to market on their own vehicle sharing (with GM Mavin and Audi Silver car), but Tesla could quickly catch up. A “Ludicrous” vehicle sharing platform can synergize Tesla with increased profits. Owners could easily share their vehicle via Tesla’s Mobile application by handing over a unique vehicle share code. Tesla sharing could potentially 10X Tesla sales by owners easily sharing their Tesla experience with thousands of other drivers. Tesla could offer a lower percentage of profits over other mainstream vehicle sharing platforms while till earning a profit. This program could easily be combined with Tesla vehicle insurance. If Tesla expedited its own car sharing platform it could synergize profits by allowing owners to offset vehicle costs and use those savings to add to vehicle options.
Potential profits - millions
Extended vehicle warranties
Tesla could offer their own extended vehicle service contracts and warranties. Offering better service contracts and warranties than 3 rd parties could keep warranty profits in house. Tesla is losing millions in opportunity lost profits by not offering services in which their owners are turning to third parties. Vehicle paint protection, wraps, window tinting, warranties, vehicle sharing, and insurance. Tesla needs to bring all these in house and own the complete vehicle sharing and ownership experience.