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Despite receiving heaps of praise and hype for their truly 21st-century approach to automaking, Tesla is still far from perfect. Tesla’s production lines have been plagued with frequent delays and flaws, causing some investors to worry if the automaker might be able to meet its targets. On top of that, some Tesla models have recently received unfavorable reviews due to software flaws which cause braking issues in some models. To make matters worse, a recent report by a team of German engineers claims that the flagship Model 3 might not even be profitable for Tesla at all due to the astronomical costs of starting a car company from scratch.
The report was published in German magazine WirtschaftsWoche and conducted by a team of engineers from various German automakers. The engineers tore the Model 3 down part-by-part to see how much of a threat Tesla might pose to German dominance of the high-end auto market. While the engineers heaped loads of praise on the Model 3’s level of technological sophistication overall, they found that the production costs of the the car might prevent it from being profitable for Tesla in the long-run, a sentiment sure to frighten off skittish investors already leery of the problem-prone automaker.
The engineers estimate the Model 3 costs around $28,000 to produce; given that the car is expected to retail for around $35,000, that slim margin could mean Tesla may struggle to reap a profit off of the car given their other costs. Unlike more established automakers, Tesla is still developing its production lines, conducting research and development, and building facilities, after all.
Will the Model 3 be profitable for Tesla? Even if it isn’t, perhaps Tesla is taking the long-term approach and seeking to establish itself on the market without worrying about cash flow. Does Mask know what he’s doing? Given that the dude shot a car into outer Space, I’d say yes.