There is a vast difference in the Model 3 and the Fiat 500e. They aren’t even
in the same category. What he said was he can’t sell the Fiat even loosing
$14000 a vehicle. The Tesla’s sell before they are made
Sent from my iPhone
> On May 30, 2018, at 4:44 PM, Len Moskowitz via EV <firstname.lastname@example.org> wrote:
> Tesla CEO Elon Musk is learning what Fiat's Sergio Marchionne already knew:
> Squeezing profit from an entry-level electric vehicle is a monumental task
> requires a great deal of patience.
> [Photo] Last week, Elon Musk (right) tweeted that shipping $35,000 versions
> of the Model 3 right now would cause Tesla to “lose money & die.” (Image
> source: Wikipedia/ By Steve Jurvetson). In 2014, FCA chairman Sergio
> Marchionne (right) said about his Fiat 500e: “I hope you don’t buy it because
> every time I sell one, it costs me $14,000.” (Image source: Wikipedia/from
> Many lessons can be learned from Elon Musk’s recent tweets about the trials
> and tribulations of the Model 3 electric car, but the main one is this: Musk
> and Sergio Marchionne have a lot in common.
> Musk’s most revealing tweet occurred last week, when he said that shipping
> $35,000 versions of the “affordable” Model 3 right now would cause Tesla to
> “lose money & die.” He added that he needs three to six months after reaching
> production levels of 3,000 to 5,000 cars a week, just for Tesla to stay alive.
> As if those words weren’t shocking enough, Musk also announced that Tesla has
> hatched a plan to market a souped-up, $78,000 version of the Model 3. The
> underlying plan is for Tesla to sell higher-priced versions of the Model 3
> until it can make ends meet with the $35,000 models. This would be
> accomplished by boosting performance and adding such features as bigger
> battery packs, automated driving capabilities, glitzy wheels, and colors
> other than black. Only after that could the company begin delivering
> lower-cost versions to the 400,000-plus customers who have plunked down
> $1,000 deposits over the past few years.
> Not surprisingly, Musk’s tweets weren’t met with a lot of happiness—even
> among the media that has helped hype the company for the past decade. In a
> typical headline, the Los Angeles Times called the Model 3 unaffordable for
> the masses. Similarly, US News & World Report ran a story saying that Tesla
> lost $14,000 on each of the Model 3s it delivered (based on an average sales
> price of $54,000) in the first quarter of 2018.
> The Old Reality
> In essence, Musk’s comments aren’t much different from those of Sergio
> Marchionne, the plain-spoken chairman and CEO of Fiat Chrysler Automobiles
> (FCA). In 2014, Marchionne made this blunt statement about the little Fiat
> 500e electric car: "I hope you don't buy it because every time I sell one,
> it costs me $14,000."
> Marchionne was, of course, heavily criticized for his comment. But the
> criticism seldom mentioned the fact that Marchionne recognized the
> inevitability of electrification. He frequently said that as emission
> standards were tightened, the auto industry would naturally gravitate toward
> a combination of combustion and electrics. Under his leadership, Chrysler
> even launched its effort to build the Pacifica plug-in hybrid minivan.The
> lesson here is that Marchionne’s reality was not much different than the
> reality now facing Elon Musk. And that same reality is shared by the rest of
> the auto industry, which has long known that the entry-level market would be
> a tough nut to crack for the electric car. In fact, the auto industry has
> known for decades that all small cars—even those with internal combustion
> engines—exist on razor-thin profit margins.
> Somehow, though, that reality has managed to elude much of the public, the
> media, and even Wall Street. That’s why Tesla’s market cap is so absurdly
> high. Today, Tesla’s market value is about $450,000 per car sold—about 16
> times that of BMW and 90 times that of GM.
> What this means is that investors have showered money on Tesla, largely
> because of its vision of the future. And—let’s be honest here—that assumption
> is based on the fact that Tesla is a Silicon Valley company led by a genius,
> whereas the conventional auto industry is characterized as a Midwest, Rust
> Belt industry with one foot firmly planted in the past.
> The corollary to this assumption is that Silicon Valley knows how to quickly
> drive the cost out of new technology and will do so in batteries and electric
> cars. In 2010, The New York Times even explained this in an article that
> introduced the concept of “Moore’s Law for Electric Cars.”
> Which, of course, is ridiculous. Gordon Moore’s famous “law” applies to
> semiconductor chips, not to batteries and not to cars. The cost of electrics
> is never, ever going to drop the way semiconductor chips did for 40 years.
> Detroit knows this and so does Musk. But the public doesn’t, which is why the
> concept seems to linger.
> The irony now is that the viewpoints of the two sides are converging. Detroit
> (which has brilliant engineers, too) now knows what Musk has taught—that
> there’s a market for electric cars in the luxury sector. And Musk is learning
> what Detroit already understood—that squeezing profit from an entry-level
> electric vehicle is a monumental task that requires a great deal of patience.
> Maybe Sergio Marchionne actually knew what he was talking about.
> Senior technical editor Chuck Murray has been writing about technology for 34
> years. He joined Design News in 1987, and has covered electronics,
> automation, fluid power, and auto.
> Len Moskowitz
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