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Berenberg says car company's 25% margin target for Model 3 is reality not hope
Thursday 24 May 2018 Author: Daniel Coatsworth

Tesla has as many critics as it does fans and many commentators have been quick to shoot down the company, saying it is burning through cash and has a boss in Elon Musk who isn’t behaving in the manner appropriate to being the chief executive of a quoted business.

Drilling down into more specifics, many commentators say Tesla won’t make as much money as the company thinks it will. In particular, critics say Tesla won’t make 25% gross margins on its Model 3 vehicle.

Having undertaken detailed analysis, investment bank Berenberg says this criticism is wrong and that the margin target is ‘reality and not a hope’.

‘Substantial gains from lower labour content, as well as capital and material use efficiencies, should allow Tesla to comfortably achieve a margin above 25% throughout the product cycle,’ it says.

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