Friday 17 August 2018 4:51 pm | Updated: Friday 24 May 2019 7:48 pm

Tesla shares fall as analysts cast doubt on Model 3 profitability

Tesla's share price slumped as much as eight per cent in trading today, after a note was published this afternoon expressing concern over the fate of its Model 3 sedan.

UBS analyst Colin Langan said Tesla's Model 3 will fail to produce better profit margins than a standard BMW sedan due to miscalculations on manufacturing costs.

In a note entitled "Is Tesla revolutionary or evolutionary?", Langan said Tesla could lose $6,000 (£4,723) on every base model of its latest car due to higher-than-predicted costs of a crucial powertrain part. It is now expected to cost $950 more per part than Tesla's last estimate.

Designed and built in-house by Tesla, Langan added that the cell cost at $148/kWh is well above Tesla’s guidance of below $100/kWh ending 2018.

The news comes in the aftermath of a tweet by Tesla's chief executive Elon Musk last week, in which he wrote he was considering taking Tesla private for $420 per share and that the necessary funding had been "secured".

US markets regulators are currently investigating the electric carmaker over those funding claims, as Tesla battles several lawsuits from shareholders who accuse the firm and Musk of deliberately trying to raise the company's share price to hurt short-sellers.

An interview with Musk published late last night by the New York Times said the CEO is worn out from the pressure of running the firm, and that Tesla is currently recruiting candidates for a supporting role.

However Musk said he has no plans to relinquish his role as Tesla's chairman and chief executive, adding:

"If you have anyone who can do a better job, please let me know. They can have the job. Is there someone who can do the job better? They can have the reins right now."