UBS, Munro, and Tesla Model 3

Source: UBS Claims Electric Car Price Parity By 2018, Says Tesla Can Make Money On Model 3 | Gas 2

Analysts for UBS have torn apart a perfectly good Chevy Bolt to see how it is put together. What they found led them to make this rather startling announcement: the “total cost of consumer ownership [of electric cars] can reach parity with combustion engines from 2018.” Notice that doesn’t mean an electric car and a conventional car will cost the same to buy new. It means they will cost the same to own, figuring in maintenance, cost of fuel, insurance, and all the other factors that are part of the total cost of ownership.
. . .
The same analysts say they expect Tesla to lose $2,800 on entry-level versions of its soon to be introduced Model 3 but think customers will opt for extra cost options that will raise the average selling price to $41,000 — $6,000 more than the base price. Tesla will be able to break even at that price, they believe.
. . .​

I've noticed a lot of fuzzy articles, some contradicting others, about Tesla Model 3 profitability. In all cases, credit is given to a UBS report or analyst note but no direct quotes or a link. But these articles about the report also mentioned teardown analysis of a Bolt and some referenced a BMW i3. Just the report remains "off stage" so I began to wonder where this all came from:

• May 19, 2017 - Subscribe to read | Financial Times
• May 19, 2017 - Electric vehicles to cost the same as conventional cars by 2018
• May 20, 2017 - UBS Claims Electric Car Price Parity By 2018, Says Tesla Can Make Money On Model 3 | Gas 2

We also know Sandy Munro also did a teardown analysis of the Model 3:

• July 16, 2018 - Tesla Model 3 exceeds 30% profit, says Sandy Munro after teardown analysis

This mysterious UBS report appears to be the same kind of 'for a fee' report made by Sandy Munro. Only this time a different set of 'analysts' versus Munro's engineers. My understanding is Munro sells their reports for high $10,000s of dollars. We won't get the UBS report for free. So we are stuck with second hand articles that sad to say appear to be imprecise.

Munro has already reported the Tesla Model 3 should return a 30% profit. For a $50,000, long range Model 3, that would be $35,000 of direct cost. Reduce the size of the battery, and that should be the profit margin for the standard, Model 3.

Since there is a gap between the UBS analysis and the Munro report, it would make sense for UBS to try and sue Munro into silence:
Autoline: Sandy Munro sued over Tesla Model 3 teardown

. . .
Talking to Autoline, an industry media, Munro initially criticised the Model 3 for poor craftmanship and shoddy build quality. Later he warmed up to the vehicle as he found the electronics and battery to be far beyond what other cars offer on the market. Most recently Munro & Associates published their conclusion that the Tesla Model 3 can be built profitably. Perhaps even at the $35,000 price originally advertised.

However, now it seems that Sandy Munro is in hot water over the Tesla Model 3 teardown. According to a statement from Autoline, Sandy Munro is no longer available to comment on the Tesla Model 3 as he is facing legal charges over the work. Currently it is unknown who sued the small consultancy providing insight to the products of the massive auto industry.​

Good news, Sandy had already revealed the key technical data. Enough to have a basis of estimate for Model 3 costs and profitability.

Bob Wilson

 

Source: UBS Rips Apart Tesla's Model 3 and Finds Some Areas Seriously Lacking - TheStreet

Top 7 Model 3 Build Issues Via UBS

1. Inconsistent gaps and flushness throughout the vehicle.
2. Missing bolts in certain parts of the vehicle (ex. driver side fender).
3. Usage of zip ties likely as a result of failed manufacturing processes.
4. Usage of multiple different bolts on the same system, driving potential assembly issues.
5. Loose tolerances on overall assembly (ex. glass rattles when doors are closed).
6. Excessive force required to close doors/trunks.
7. Lack of manual rear door handle.

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We are approaching the end of August when many "short" positions have to be resolved. So I suspect we're about to see a lot of 'leakage' of trash-talking Tesla. Here is a 'leak' from the UBS tear-down analysis.

Bob Wilson

 

UBS advertises on their web page that they provide help for "borrowed securities" (translation 'shorts').

Bob Wilson