One of the fun aspects of the automobile industry involves watching all the automakers humorously attack each other in clever and witty ways with advertising and interviews, simply because they’re competing with each other and they take each other’s contests in good spirits.
But sometimes, these competitions can get heated and like Election Season for the President of the United States, animosity can arise when the competitions gets even greater and stiffer. And that’s sort of what happened hear, with the former engineer of the Chevrolet Volt, Jon Bereisa.
According to Bereisa, he doesn’t have high hopes for the Tesla Model 3 and recently, he voiced his opinion and belief that Tesla is going to lose money on every Model 3 sold.
Now, Bereisa could simply be a hater since because he has ties with direct competitors to Tesla. But then again, the prospect of automakers losing money on new products isn’t exactly a far-fetched prediction, since car companies can lose money on products from mishaps with execution and demand.
For instance, Volkswagen AG lost a significant amount of money for every Bugatti Veyron made and sold. But this is because Volkswagen AG utilized a cost-no-object strategy to build and design the Veyron, hence its capabilities and astronomical price. Cars like the Veyron are meant to make a statement, and that’s what the Model 3 is trying to do.
In the case of the Model 3 however, Bereisa came to this conclusion by analyzing the Model 3’s “factory variable cost,” where he determined that the 2018 Tesla Model 3 will cost around $1,500 more than the sedan’s starting price of $35,000.
In comparison, the new Chevrolet Bolt has a “factory variable cost” of $4,980 less than the Bolt’s $37,500. The reason for these apparent margin differences is ultimately attributed to the cost of the batteries.
Still, despite Tesla’s profound success with the Model S, the same success hasn’t been observed with the new Model X, which is facing some launch challenges. Because of this, more skepticism is brewing with the Model 3 as well and to hear that Tesla might lose money on every car made, might not be conducive to Tesla’s fight to stay relevant.
– By: Chris Chin