cars news 10: Marchionne Doubts Pricing Strategy Behind Tesla Model 3

Since reservations opened on March 31, customers have been clamoring for the Tesla Model 3 that starts at $35,000 before incentives. But the big question is how the entry-level model, which is about half the starting price of the Model S, will prove profitable for the company.

At least FCA CEO Sergio Marchionne isn’t convinced. At an annual meeting in Amsterdam today, he said he doesn’t see a way to make the Model 3 profitable at its current base price, reports Automotive News Europe. “I’m not surprised by the high number of reservations but you have then to build and deliver them and also be profitable.”

Marchionne also added that if Tesla CEO Elon Musk “can show me that the car will be profitable at that price, I will copy the formula, add the Italian design flair and get it to the market within 12 months.”

FCA has been slow in electrifying its vehicle lineup, to which Marchionne says it’s “better late than sorry.” The automaker offers the 500e in limited quantities here in the U.S., and will soon introduce a plug-in hybrid Pacifica minivan.

Meanwhile, Tesla has said it will begin production of the Model 3 in late 2017, and plenty of measures have been taken to keep costs at bay. The Model 3 has a structure made mostly of steel rather than aluminum, for one thing. We’ve also heard Tesla’s Gigafactory will eventually be able to build battery packs on a large scale to reduce the per-kWh cost by more than 30 percent.

Source: Automotive News Europe (Subscription required)