The Tesla Model 3 cost $28,000 to build | Hacker News Reader

The Tesla Model 3 cost $28,000 to build

qz.com

21 pointsprostoalex13 comments

Previous: https://news.ycombinator.com/item?id=17198517

If anyone else were constantly writing one-sided articles on a product or company, with referral links in their signature, they'd be down-voted like crazy. Yet Electrek repeatedly makes the front page.

> The margins on the Model 3 must still pay for a cost structure that legacy carmakers don’t have, including planned factory expansions, new automation investments [...]

What kind of voodoo accounting theory is this? No, R&D costs don't "have to" be covered by profit, they're bets against future earnings. That's the whole notion behind the idea of "investment" securities, the stock market, venture finance, corporate bond sales...

I mean, it's possible to do an analysis such that the margin, expected sales growth and reasonable efficiency improvements combine to a product that's a net loss. It happens. But this isn't it.

The numbers as they are say the Model 3 is a profitable car (assuming they can get production ramped, of course).

It depends on what is thrown into R&D costs. For improvements and maintenance to current production lines, that would traditionally be considered as part of the gross margin. Though research into completely new production lines would not.

Tesla classifies both as R&D and doesn't include them as part of their gross margins.

I'd love to see some analysis of the comment section of articles like this. Would be interesting to quantify the #ProtectElon brigade a little bit.

What proportion of HN readers hold TSLA stock...

I am going to wait for the Sandy Munro figures.

For those who are unfamiliar with Munro, have a look at the build quality discussion he had here https://www.youtube.com/watch?v=CpCrkO1x-Qo

The headline takes some random person's conjecture and displays it as if it were a fact. Not to mention, it takes a pretty-sounding number and makes a small nice soundbite out of it, despite being nearly meaningless. You can't infer Tesla's profit margin from this, and you also can't trust the number next week as so much is changing so rapidly that it hardly matters.

This is not a random person but a service company which has reverse engineered 4 Teslas for german car manufacturers.

Among others these car engineers spotted that the new battery cells use nearly less then a third of cobalt (2,8% vs 8%) of ordinary cells what no other company has achieved. This should be a quite competitive advantage

That's just the difference between different lithium cathode technologies. ACM uses ~3% Cobalt and NCM 111 uses ~8% [1]

[1] https://www.cell.com/joule/pdf/S2542-4351(17)30044-2.pdf Table 1

Elon retweeted [1] the underlying article with the statement: "Best analysis of Model 3 to date". He also acknowledged [2] that $28,000 is a reasonable cost estimate once they reach scale.

Try doing a little bit of research before dismissing an article that simply doesn't happen to fit within your worldview

[1] https://twitter.com/elonmusk/status/1002270980755013632

[2] https://twitter.com/FredericLambert/status/10022714993598423...

There's a lot of assumptions buried in that statement. Once they reach scale, sure, but they also raised $1.26 billion to manufacture the Tesla 3. That's going to take a lot of cars to amortize out the cost of the production pipeline, and R&D.

These production cost numbers remind me of bad graphs. I'm always left wondering if the author really meant them to be informative and accurate, or just wanted to rabble rouse.

A Tesla 3 doesn't cost $28,000 to make. It contains $28,000 worth of parts and labor. Just like my sandwich doesn't cost $1 to make. That's only true if I ignore the waste materials, kitchen, lights, cleaning supplies, house, neighborhood and city I bought into in order to enjoy the privilege of making my own sandwich in peace and quiet. Just standing in my kitchen that long cost me 6 cents in property taxes, for instance.

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