Tesla Motors Inc (NASDAQ:TSLA) Trying To Make Model 3 Friendly To Its Pocket


Tesla Motors Inc (NASDAQ:TSLA) promised to make Model 3 a mass-market electric engine car. The company is expected to show off the car next year with its possible market availability in 2017. However, it is emerging that Tesla’s CEO, Elon Musk, is asking engineers to come up with a design that will give the Model 3 a drag that is 0.20 or lower. If Tesla achieves a drag of 0.20 in Model 3, the company can use a small battery in the car without compromising on the promised range of 200 miles in one charge.

Tesla Motors Inc (NASDAQ:TSLA) is currently doing a loss business. The company’s revenue and adjusted EPS loss of $1.24 billion and $0.58, respectively, missed the consensus estimates. Analysts on the average expected the company to report revenue of $1.26 billion and adjusted EPS loss of $0.58.

Lowering production cost

With the losses in the current business, Tesla seems to want to at least break even with the mass-market Model 3 so that it can sidestep losses. That explains why the company is pushing engineers to be more innovative with the Model 3 design. At a price in the vicinity of $35,000, Tesla wants to produce a mass-market electric car with a drag of not more than 0.20. With that, Tesla can reduce the amount of battery cells it uses to power the Model 3 without affecting the promised 200-mile range, thus allowing it to lower production cost of car.

But how far is Tesla Motors Inc (NASDAQ:TSLA) away from a drag of 0.20? Tesla’s flagship Model S boasts a drag of 0.24, which means that the company’s target of 0.20 in Model 3 is not far off.

Weird design for Model 3?

Nevertheless, while cars with lower drag are efficient in fuel consumption and their speed performance is also great, they tend to come with weird designs. Could that be what Tesla Motors Inc (NASDAQ:TSLA) is trying to bring in Model 3? Anything can happen and the truth will be known when the company shows of the car’s design next year. However, Tesla is unlikely to come up with a strange design in Model 3 given the company has shown to be design-conscious as can be seen in Model S and Model X.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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