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Elon Musk boldly predicts Model 3 revenue and profits

Leading up to the grand opening of the Tesla Gigafactory on July 29, CEO Elon Musk made several statements and predictions about the company’s entry-level Model 3. Musk predicted $20 billion revenue and $5 billion profits from the Model 3 alone once it gets up to full production, according to Electrek.

Musk also said the Model 3 is on track to start production next summer with first deliveries soon after. He confirmed the “pencil is down” on preliminary engineering designs. Many car manufacturers, component suppliers, and analysts have said the timeline is unrealistic for a new model, but Musk asserts the Model 3 and its planned production line allow the tighter time frame.

Musk has said in the past that the relative simplicity of electric cars compared to cars with internal combustion engines will permit speedy line development. At an earlier occasion, Musk said, “[With the Model 3] we are making something that is a lot simpler, but still a car that people will love and where every design decision is factoring in manufacturability and making sure that when we design something that we can manufacture at volume, at an affordable price, and on the schedule we are targeting.”

Tesla has not updated the number of Model 3 reservations since a Security Exchange Commission filing in mid May. In that filing, Tesla stated it was holding a net total of 373,000 reservations including refunds and some that were denied because the company believed they were from investors who just wanted to buy and quickly resell for a profit.

The Model 3 has a starting price of $35,000 but options can quickly add up, including for performance versions — Musk has said there will be a Ludicrous Mode version for the Model 3. With Musk’s previous statement that annual production will grow to 500,000 vehicles by 2018, if annual revenues are expected to be $20 billion with 25-percent gross profits of $5 billion, that suggests something in the range of an average $40,000 Model 3 price, assuming the production numbers refer only to Model 3s.

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