Model 2 is critical to the continued success of $TSLA, and we should learn a lot more this week about it. Here is an overview of what we expect in 4 slides.👇
We expect Model 2 15% shorter, 30% lighter and 25% smaller battery than Model 3. We looked at how ICE compacts compare to mid-size ICE sedans and extrapolated the comparison between Model 3 and ICE mid-size sedans to reach this conclusion.
We expect Model 2 37% less expensive to build than Model 3. Half the difference derives directly from the car being smaller, the other half mostly from design, architecture, and manufacturing innovations. This means a $21.6k COGS at scale, including full FSD Hardware.
FSD capable, with superior range and performance, with the screen and supercharging experiences of Tesla, Model 2 will command a premium on the likes of a Corolla, like Model 3 commands a premium over an Accord. It means gross margin above 20% vs. mid-single digits for Corolla...
Implications: $TSLA can maintain a gross margin heading towards 30% for autos, with Model 2 and FSD both increasing in the mix. Moreover, at $25k MSRP, Model 2 addresses 80% of the car market and paves the way for Tesla to exceed 12m units and $400bn auto revenues in 2030...
This is only a summary of our work. We analyzed the teardown of 7 different cars, analyzed in-depth the financials of a dozen auto manufacturers, and built from the bottom a detailed cost structure for Model 3 and Model 2. This was a lot of work... and a lot of fun. /End
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