News
Tesla’s China-made Model 3 will be a cash cow for the automaker as margins set to improve even more
A new report by equity research firm suggests that Tesla’s gross margin for Made-in-China (MIC) Model 3 could increase to 40 percent or even higher, and with higher profit margins, the electric car manufacturer can create the conditions that will further help stimulate sales in the country.
The report published by China-based equity firm Chuancai Securities and shared with Teslarati by Tesla Model S/X owner and Twitter user Ray4Tesla, says that parts domestication will be key to achieve higher profit margins with the MIC Model 3.
A Chinese research paper I was reading shows the gross margin for MIC #Model3 is as high as 35% vs 20% for US-made Model 3s. Production efficiency will further improve margins. pic.twitter.com/gXGdzg7WjF
— Ray (@ray4tesla) January 15, 2020
“We assume that depending on the progress of Tesla’s parts domestication, the cost of raw materials will fall by 10%-20%. In this case, gross profit margin of Model 3 produced by the Chinese factory will reach more than 35%, which is much higher than the American factory by about 20% gross profit level,” the report reads. In October 2018, Tesla said that its Model 3 gross margins were more than 20 percent but this was adjusted when it decided to drop the price of the electric sedan to make it accessible to more US buyers.
The report also estimates that after the localization of parts, Tesla’s expenses for raw materials for the China-made Model 3 will drop by 10 to 20 percent. It also takes note of cheaper manufacturing costs and labor costs. Taking into account all of these factors, the researchers concluded that the total production cost may fall by 20-28 percent and thereby further improving profit margin.
This new report from China practically says that the MIC Model 3 has the potential to be its cash cow — read: high volume sales and higher profit margins. This is aside from the fact that Tesla CEO Elon Musk has also formally launched the Model Y program in the country during the event for the first public deliveries of the company’s mass-produced electric sedans. According to the report, buyers of the affordable SUV in the country might still enjoy preferential purchase tax, from which its smaller sibling was also exempted from.
Tesla has the potential to claim China, the biggest automotive market in the world, to be its strong foothold. If that happens, it can boost the possibility of sustained profitability for the brand that Musk wants to achieve.
With Musk planning to create an engineering and design center in China, it will not be a surprise if the Gigafactory 3 will play a key role in conquering potential markets in Asia and in pushing for the growth of the brand int its existing markets in the region.
The analysis of the researchers is consistent with earlier rumors that Tesla can further lower the price of the Model 3 once it sources parts, including expensive parts such as its battery, from local suppliers. For now, Tesla has lowered the price of the Model 3 in China to around $42,919 from the original price tag $50,000 as the new year kicked off, a move that practically undercut other brands such as BMW and Mercedes that offer vehicles in the same segment and the electric car manufacturer surely sparked more interest as showrooms in the country were filled with potential buyers.
At present, Tesla’s Gigafactory 3 in Shanghai already has a run rate of 3,000 units per week and plans to hit that production goal as more workers are added to the frontline.
News
Tesla is not sparing any expense in ensuring the Cybercab is safe
Images shared by the longtime watcher showed 16 Cybercab prototypes parked near Giga Texas’ dedicated crash test facility.
The Tesla Cybercab could very well be the safest taxi on the road when it is released and deployed for public use. This was, at least, hinted at by the intensive safety tests that Tesla seems to be putting the autonomous two-seater through at its Giga Texas crash test facility.
Intensive crash tests
As per recent images from longtime Giga Texas watcher and drone operator Joe Tegtmeyer, Tesla seems to be very busy crash testing Cybercab units. Images shared by the longtime watcher showed 16 Cybercab prototypes parked near Giga Texas’ dedicated crash test facility just before the holidays.
Tegtmeyer’s aerial photos showed the prototypes clustered outside the factory’s testing building. Some uncovered Cybercabs showed notable damage and one even had its airbags engaged. With Cybercab production expected to start in about 130 days, it appears that Tesla is very busy ensuring that its autonomous two-seater ends up becoming the safest taxi on public roads.
Prioritizing safety
With no human driver controls, the Cybercab demands exceptional active and passive safety systems to protect occupants in any scenario. Considering Tesla’s reputation, it is then understandable that the company seems to be sparing no expense in ensuring that the Cybercab is as safe as possible.
Tesla’s focus on safety was recently highlighted when the Cybertruck achieved a Top Safety Pick+ rating from the Insurance Institute for Highway Safety (IIHS). This was a notable victory for the Cybertruck as critics have long claimed that the vehicle will be one of, if not the, most unsafe truck on the road due to its appearance. The vehicle’s Top Safety Pick+ rating, if any, simply proved that Tesla never neglects to make its cars as safe as possible, and that definitely includes the Cybercab.
Elon Musk
Tesla’s Elon Musk gives timeframe for FSD’s release in UAE
Provided that Musk’s timeframe proves accurate, FSD would be able to start saturating the Middle East, starting with the UAE, next year.
Tesla CEO Elon Musk stated on Monday that Full Self-Driving (Supervised) could launch in the United Arab Emirates (UAE) as soon as January 2026.
Provided that Musk’s timeframe proves accurate, FSD would be able to start saturating the Middle East, starting with the UAE, next year.
Musk’s estimate
In a post on X, UAE-based political analyst Ahmed Sharif Al Amiri asked Musk when FSD would arrive in the country, quoting an earlier post where the CEO encouraged users to try out FSD for themselves. Musk responded directly to the analyst’s inquiry.
“Hopefully, next month,” Musk wrote. The exchange attracted a lot of attention, with numerous X users sharing their excitement at the idea of FSD being brought to a new country. FSD (Supervised), after all, would likely allow hands-off highway driving, urban navigation, and parking under driver oversight in traffic-heavy cities such as Dubai and Abu Dhabi.
Musk’s comments about FSD’s arrival in the UAE were posted following his visit to the Middle Eastern country. Over the weekend, images were shared online of Musk meeting with UAE Defense Minister, Deputy Prime Minister, and Dubai Crown Prince HH Sheikh Hamdan bin Mohammed. Musk also posted a supportive message about the country, posting “UAE rocks!” on X.
FSD recognition
FSD has been getting quite a lot of support from foreign media outlets. FSD (Supervised) earned high marks from Germany’s largest car magazine, Auto Bild, during a test in Berlin’s challenging urban environment. The demonstration highlighted the system’s ability to handle dense traffic, construction sites, pedestrian crossings, and narrow streets with smooth, confident decision-making.
Journalist Robin Hornig was particularly struck by FSD’s superior perception and tireless attention, stating: “Tesla FSD Supervised sees more than I do. It doesn’t get distracted and never gets tired. I like to think I’m a good driver, but I can’t match this system’s all-around vision. It’s at its best when both work together: my experience and the Tesla’s constant attention.” Only one intervention was needed when the system misread a route, showcasing its maturity while relying on vision-only sensors and over-the-air learning.
News
Tesla quietly flexes FSD’s reliability amid Waymo blackout in San Francisco
“Tesla Robotaxis were unaffected by the SF power outage,” Musk wrote in his post.
Tesla highlighted its Full Self-Driving (Supervised) system’s robustness this week by sharing dashcam footage of a vehicle in FSD navigating pitch-black San Francisco streets during the city’s widespread power outage.
While Waymo’s robotaxis stalled and caused traffic jams, Tesla’s vision-only approach kept operating seamlessly without remote intervention. Elon Musk amplified the clip, highlighting the contrast between the two systems.
Tesla FSD handles total darkness
The @Tesla_AI account posted a video from a Model Y operating on FSD during San Francisco’s blackout. As could be seen in the video, streetlights, traffic signals, and surrounding illumination were completely out, but the vehicle drove confidently and cautiously, just like a proficient human driver.
Musk reposted the clip, adding context to reports of Waymo vehicles struggling in the same conditions. “Tesla Robotaxis were unaffected by the SF power outage,” Musk wrote in his post.
Musk and the Tesla AI team’s posts highlight the idea that FSD operates a lot like any experienced human driver. Since the system does not rely on a variety of sensors and a complicated symphony of factors, vehicles could technically navigate challenging circumstances as they emerge. This definitely seemed to be the case in San Francisco.
Waymo’s blackout struggles
Waymo faced scrutiny after multiple self-driving Jaguar I-PACE taxis stopped functioning during the blackout, blocking lanes, causing traffic jams, and requiring manual retrieval. Videos shared during the power outage showed fleets of Waymo vehicles just stopping in the middle of the road, seemingly confused about what to do when the lights go out.
In a comment, Waymo stated that its vehicles treat nonfunctional signals as four-way stops, but “the sheer scale of the outage led to instances where vehicles remained stationary longer than usual to confirm the state of the affected intersections. This contributed to traffic friction during the height of the congestion.”
A company spokesperson also shared some thoughts about the incidents. “Yesterday’s power outage was a widespread event that caused gridlock across San Francisco, with non-functioning traffic signals and transit disruptions. While the failure of the utility infrastructure was significant, we are committed to ensuring our technology adjusts to traffic flow during such events,” the Waymo spokesperson stated, adding that it is “focused on rapidly integrating the lessons learned from this event, and are committed to earning and maintaining the trust of the communities we serve every day.”
Tesla is not sparing any expense in ensuring the Cybercab is safe
Tesla’s Elon Musk gives timeframe for FSD’s release in UAE
