Having seen one too many lazy recent media reports touting the upcoming “$35,000” Tesla (NASDAQ:TSLA) Model 3, I decided to update my article from nearly two years ago with some fresh numbers explaining why TSLA will never be willing to sell it in volume at anywhere close to that price. Here’s the math…

Tesla’s Q3 2016 automotive revenue (excluding leased cars) was $1,917,442,000 less $139,000,000 in ZEV credit sales = $1,778,442,000. That revenue came from 16,790 non-leased cars (see. p.28 of the 10-Q), which means the average car sold for $105,923. Cost of automotive sales was $1,355,102,000, which means gross profit (excluding ZEV) was $1,778,442,000 minus $1,355,102,000 = $423,340,000, which means gross profit per car averaged $423,340,000 divided by 16,790 cars sold = $25,213. Thus, Tesla’s cost to build its average car was the $105,923 in average revenue minus $25,213 in average gross profit = $80,710.

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