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Is a Profitable Tesla Model E Just a Dream?

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Tesla Model E, in Elon Musk's Planner, Will it Be Profitable?
Tesla Model E, in Elon Musk’s Planner, Will it Be Profitable?

Tesla Motors CEO Elon Musk’s master plan for the company seems to be on track, with full production of the Tesla Model S, expansion of the Tesla Supercharger network, and the upcoming Tesla Model X and Tesla Model E.

The idea was simple, start with low-volume high-profit vehicles, the Tesla Roadster and Tesla Model S, to get the company rolling. Roll over the profits from these vehicles and put that into streamlining production and developing future models. The Tesla Model X is expected sometime in 2015, which will most-likely fall into the same low-volume high-profit bracket as the Model S. Tesla Motors’ so-called “third generation,” rumored to be the Tesla Model E, is supposed to be the opposite, a high-volume low-profit vehicle.

Elon Musk says that the Tesla Model E, if that’s what it ends up being called, will be smaller than the Tesla Model S, have a 200-mile range, and will cost about $35,000. Currently, it is estimated that Tesla Motors makes about 45% profit on each Tesla Model S that it sells, and that the mass-market Tesla Model E will be sold at a more modest profit margin is just 15%. Still, can reducing the size of the battery and the vehicle itself, as well as most to mass-production, 300,000 units per year versus 30,000 units per year, make for a profitable mass-market electric vehicle?

One analyst on SeekingAlpha says this combination, ostensibly resulting in “a profitable $35,000 Tesla Model E, is a pipe dream.” He figures that the most-basic Tesla Model S 60 kWh costs about $59,559 to build, before upgrades. If the Tesla Model E is to be smaller, less-equipped, and mass-produced, could the price drop below the $35,000 selling point to make it profitable? SeekingAlpha analyst Mark B. Spiegel calculates that, even with the construction of the Tesla Gigafactory, expanding to 300,000 units per year, and making the Tesla Model E smaller and with less range, it will still cost Tesla Motors about $48,000 to build each one. Does Elon Musk have a trick up his sleeve, or is this really “a pipe dream,” as Spiegel asserts?

Photo credit: OnInnovation Foter CC BY-ND

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4 COMMENTS

  1. Ladson LoneWolffe  Of course, that is the crux of this whole thing. The gamblers and the moneymakers all maneuvering waiting for something to fail so they can make a profit. Funny part is, they don’t suffer when things go south. I’m with you

  2. LoneWolffe Ladson  

    I don’t think Musk really cares that much about the profit thing; he is on record to meet his goal of building electric cars for the middle class.  But, because Tesla is a Public Company, the greedy Wall Street crooks indirectly run his finances by feeding the fires of speculation, positively and negatively.  And, no public company is safe from takeover.  Right now there appears to be no fear because the Casino Banksters see Tesla as a darling and are driving the price upward.  But, you can see by this article, there are those who have shorts on the stock and are waiting for bad news so they can collect.  I hope they lose their drawers.

  3. Ladson  Personally, I believe that TSLA will continue to be profitable, right through Tesla Model X, E, R, and whatever else Mr. Musk cooks up. Additionally, looking at TSLA as part of a larger Elon Musk organism, would it even matter if the Model E was produced at a loss in the beginning?

  4. Be careful who you quote.  There are hedge fund managers who produce propaganda  in an attempt to move the stock up or down depending on their stock bets.  They are not above manipulating TSLA with words and deeds.

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