As pre-orders for Tesla’s recently unveiled Model 3 are nearing 400,000 units, analysts are trying to figure out whether the vehicle will be profitable. Tesla doesn’t usually comment on battery pack costs as that figure is important for its suppliers like Panasonic. Earlier this week, UBS analyst Colin Langan hosted a call with Jon Bereisa, the CEO of Auto Letrification. Bereisa has spent more than three decades at General Motors and was the chief engineer for the Chevy Volt.

Tesla Reveals Model 3 Battery Pack Option, Battery Costs

Will Model 3 be profitable for Tesla?

Langan believes that Model 3 is unlikely to be profitable at the base price of $35,000. Jon Bereisa explained that the mass-market car’s estimated cost breakdown would make it unprofitable. He said the Model 3’s factory variable cost (FVC) would be $1,510 above the base price of $35,000. By comparison, the Chevrolet Bolt’s FVC is estimated to be $4,980 below its $37,500 starting price.

Jon Bereisa’s analysis was based on Model 3 featuring a 60kWh battery pack and Tesla achieving a cost of $190/kWh by the time Model 3 enters production. Battery costs have been declining consistently. The costs are likely to see a huge drop once the Gigafactory becomes fully operational. Bereisa estimates that Tesla’s current battery pack cost is $260/kWh while that of General Motors is $215/kWh. GM sources battery packs from LG Chem.

Model 3’s battery to be smaller than 60kWh

That’s when Tesla’s VP of Investor Relations Jeff Evanson chimed in on the call between Bereisa and UBS analyst Langan. Evanson corrected Jon’s analysis. He revealed that Tesla’s battery pack cost is already below $190/kWh. That is more than 25% below Bereisa’s estimate, and is expected to decline further in coming years. Jeff Evanson added that Model 3’s battery pack will be smaller than 60kWh.

The mass-market electric vehicle will be only partially aluminum, unlike Model S which is all-aluminum. The upcoming car is about 20% smaller than Model S, which should help it achieve the 215 miles range on a less than 60kWh battery pack. However, Jon Bereisa expressed skepticism about Tesla’s battery costs currently being below $190/kWh.