Tesla Model 3 may be delayed until the end of 2018

One of the biggest and most important questions currently surrounding Tesla is whether or not the company will be able to manufacture its highly anticipated Model 3 at scale and begin deliveries on time. While Tesla vehemently maintains that Model 3 deliveries will begin in earnest in late 2017, there are more than a few reasons to be skeptical.

For starters, Tesla has a long history of making delivery promises it simply can’t keep, with the delayed launch of the Model X being a prime example. Second, demand for the Model 3 is unlike Tesla has every seen before, with the number of reservations likely falling somewhere in the 400,000 range. Third, manufacturing the Model 3, while technically less complex a job compared to the Model X, requires that the company’s gargantuan Gigafactory in Nevada will be able to churn out battery packs as quickly as possible.

Speaking to Tesla’s bold manufacturing ambitions, the company for the longest time said it wanted to reach a manufacturing capacity of 500,000 vehicles by 2020. A few months ago, however, Tesla said that it was pushing that timeline ahead and now hopes to reach that milestone by 2018.

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Tesla’s Model 3 Base Price Will Be $15,000 Higher Than Musk Claims

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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