In the article, Munro blames Tesla’s inexperience with automaking for squandering away a large portion of the car’s profitability margin. The main issue is with body design, said to be engineered by people with no previous experience on car development. Munro says the Model 3‘s body is needlessly complicated with strengthening done in places where it isn’t necessary and some sections crafted of multiple parts when a far simpler design would have sufficed, and that the weld points and rivets of the car’s design make it unsuitable for heavy automation. As a result, the Model 3 costs some $2,000 more to build than a similarly priced BMW i3, says Munro.
The bottom of the Model 3 has a steel and aluminum frame, while the car’s floor-mounted battery would already add stiffness to the structure by itself — meaning the Model 3 is, in Munro’s view, heavier and more expensive without a distinct benefit. Another thing is the trunk well, which is made of many small sections that have been riveted and welded together, while other carmakers use a one-piece or stamped solution. Both of these things take time and money, and stand as testament of Tesla “learning the mistakes everyone else made years ago,” as Munro says.
Reportedly, Munro sent Tesla a list of 227 suggested improvements, free of charge. Bloomberg says Tesla’s response was that the company has already refined its production processes after this car was built.
Munro says the fully loaded Model 3 has a chance of an overall 30 percent gross profit margin, and that the lower-end cars stand at 10 percent. The particular Model 3 addressed in the Bloomberg article is a $50,000 car, with Munro estimating its total assembly cost at $34,700 — logistics and labor costs not included, and the estimate based on plant efficiency comparable to an average Toyota or GM plant. Munro hasn’t been able to visit the Fremont manufacturing facility, so the estimated profitability remains an estimate.
The fact that Tesla employs 10,000 workers at the same factory where Toyota and GM sufficed with 4,400 is also mentioned. “There’s no way you need 10,000 people even with three shifts and with a lot of work done in house,” Munro says.
Still, he lauds the cars’ advanced electric motor design, calling it a “game changer” that everyone should be benchmarking. In Munro’s view, consistent profits are not unattainable for Tesla if the right, experienced people are hired to oversee the manufacturing process.