The Model 3's profitability is a critical issue for Tesla (NASDAQ:TSLA), and UBS analysts say the company would lose about $2,300 per car if it sells the vehicle at its long-promised $35,000 price tag while a more expensive version at $42,000 would eke out a $670 profit.
The Model 3 price currently ranges from $49,000 to about $80,000, and UBS estimates Tesla's operating profit is $3,420 per vehicle at the low end of the range, which would help explain why CEO Elon Musk is forecasting a profit in Q3.
The lack of a $35,000 base model in Tesla’s lineup, as well as early demand for the more expensive versions, should set up the company for its best quarter of profitability from the vehicle ahead of less-costly versions down the road that will reduce the lineup’s margins, says Colin Langan, who wrote the UBS report.
“Q3 is Tesla’s best shot because of this pricing dynamic,” Langan said of the company's profitability. “I’m very clear that I don’t think that’s sustainable.”
Now read: 3 Things I Think I Think - Tesla X 3 »
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