Posted on June 03, 2018 by Matt Pressman
American auto consultant Sandy Munro and his team recently performed an extensive teardown of Tesla's Model 3. While the results were fascinating, it's worth pondering... what might the German carmakers think of Tesla's Model 3 after performing an exhaustive teardown of their own? It turns out we now have the answer.
Above: Tesla's Model 3 (Image: CleanTechnica)
According to Germany's Handelsblatt Global, "German fears [emerge] after covert look under [the] hood of Tesla... German carmakers quietly acquired and dismantled several new Tesla Model 3 cars to study their technology and production costs. The results have proved a cause for concern." Hmmm, what did they find that could be cause for concern?
Handelsblatt's Stefan Hajek writes, "Engineers working on the orders of German carmakers procured several Tesla Model 3 cars on the gray market, shipped them back to Germany and dismantled them piece by piece to study the US e-car upstart’s technology. The experts made several shocking discoveries."
German carmakers are spooked
Hajek contends that even before these findings, "German carmakers regard[ed] California-based Tesla as a huge threat, both because of its technology and popularity. Last year, the firm’s upmarket model, the Model S, sold better in Europe than its fuel-powered top-end rivals the Mercedes-Benz S-Class and the BMW 7-series."
Above: Another Handelsblatt cover depicts Elon Musk and Tesla being pursued by German carmakers (Source: Handellsblatt)
Now, after German engineers performed this Model 3 teardown, it's becoming more evident that "Tesla’s expertise is also giving the Germans sleepless nights." Yes, German automakers are investing heavily in EVs, "but they are far behind Tesla, and still struggling to shake off the Dieselgate scandal."
Hajek elaborates, "Most worryingly for the likes of VW, Daimler and BMW, analysis of the Model 3 shows it’s likely to be hugely profitable, and secondly, they think Tesla has developed a new battery that uses only a fraction of the hard-to-source cobalt found in conventional batteries."
Healthy profit margins
Despite what many have predicted, Tesla's Model 3 will have significant profit margins. Hajek notes, "The Model 3, which is intended to be the first truly mass-market all-electric car, will retail for between $35,000 and $78,000. But the cost of its material will amount to just $18,000, with production adding another $10,000."
Above: A matte black Model 3 at Tesla's factory (Image: Teslarati)
“If Tesla can, as they plan, produce around 10,000 vehicles a week, the Model 3 could make a massive contribution to their bottom line,” said one production engineer, who was involved in the reverse-engineering and testing operation.
Originally reported in German business magazine WirtschaftsWoche, a sister publication of Handelsblatt, Musk endorsed the article on Twitter as "the best analysis to date" and "definitely" agreed on Tesla's low costs cited in the article (contingent upon a 10k/week run rate).
Innovative battery chemistry
Tesla's been actively working on eliminating cobalt content in it's batteries due to its high cost and questionable sourcing practices. It's no wonder as "around 60 percent of global cobalt reserves are located in the Democratic Republic of Congo, where supply chains are difficult to manage and the mineral has been associated with child labor, warlordism and conflict. This has been made worse by spiraling demand for cobalt in e-car manufacturing, which has seen its price triple in the past 18 months. It is expected to continue to rise."
Above: Production of lithium-ion battery cells, modules, and packs at Tesla's Gigafactory (Image: eenews)
And unlike their German counterparts, it turns out Tesla is making significant progress in their efforts to reduce cobalt content in their batteries. According to laboratory analysis, it appears that Tesla has reduced battery cobalt content "from the usual 8 percent to just 2.8 percent."
“If they have managed that, it would represent a huge competitive advantage for Tesla. Cobalt is so difficult to source on the world market right now,” said Sven Bauer, head of BMZ, Germany’s largest independent battery producer.
A hefty head start
To gain some perspective, German carmakers have released a handful of half-hearted electrified models. Meanwhile, Tesla went all-in on all-electric cars dating back to the company's humble beginnings over a decade ago. The Silicon Valley automaker's head start might prove troubling for German auto execs.
Above: Tesla takes on German auto giants like Porsche and BMW (Image: Car Magazine)
To be fair, there have been a few all-electric German cars like BMW's i3, VW's e-Golf, and Mercedes' B250e. Yet ironically most of the Mercedes B250e powertrain was produced by Tesla, which supplied not only the battery pack but the entire B-class electric-drive system.
In some instances, Tesla has a 10-year jump on marquis German brands (like Audi). Hajek points out, "The widening production gap between them and the US firm is a particular worry. The Tesla Roadster went into production in 2008; Audi will release Germany’s first all-electric car, the e-tron quattro, by the end of the year."