Sandy Munro has provided in-depth analysis of electric vehicles for several years now, with his first major contribution a report for UBS on the Chevy Bolt. He brings several decades of expertise in the auto manufacturing space and is widely cited for his views on the Tesla (TSLA) Model 3. In particular, his initial report on the Model 3 was circulated by virtually every major financial news website, in which he called the construction of the (early production) Model 3 his firm analyzed akin to “a Kia in the 90s.” His view has been a cornerstone of the arguments many bears on this site have advanced. While his subsequent coverage of Tesla was more mixed (in which he asserted the battery and electronics were best in class, and that Tesla had a generally pretty well designed product, but the engineering and manufacturing were sub-par), the overriding takeaway he provided was that Tesla’s design and manufacturing would make base Model 3s “rare as hens teeth.” His previous position was that profitability would be limited even on the $50K-plus versions of the car, and that there would be no real way to make money on base model.
Yet, in an Autoline interview released today, Munro has had to, in his own words “eat a bit of crow.” It’s a short interview and worth the watch. The core of Munro’s argument is that Tesla reduced costs for a number of smaller parts (e.g., the rear-view mirror) by making them more basic and allowing other, more core parts (in this case, the touch screen) to work “double or triple duty.” In total, he estimated that the Model 3 version he tore down (a long-range Tesla) achieves gross margins in excess of 30%.