(Reuters) - Electric carmaker Tesla Inc's premium Model 3 sedan will not produce better profit margins than a conventional BMW and the company could actually lose $6,000 (£4,720.3) on every base model due to higher costs for the powertrain, according to an analyst at UBS.
Tesla's shares were down about 3 percent at $325 in premarket trade on Friday.
The company is banking on its Model 3 to ensure future profitability. The base model is $35,000 (£27,535.2), but car buyers can upgrade to a $49,000 (£38,549.3) version, which has a longer range battery and high end trim.
UBS said the powertrain - a component crucial to Model 3's architecture, cost $950 higher than a previous forecast, but still better compared to General Motors Co's Chevy Bolt.
"While Tesla's powertrain was better than peers in terms of cost per kWh and performance, their lead was not as large as we would have expected," analyst Colin Langan said in a research note titled "Is Tesla Revolutionary or Evolutionary?"
Langan added that the cell cost at $148/kWh is well above Tesla's guidance of below $100/kWh ending 2018.
He said the powertrain modules are in-house designed and built by Tesla, which is enabling it to move earlier with new technologies.
The Model 3 UBS Evidence Lab disassembled was $49,000, which included the 75 kWh battery and the high end trim. The model is expected to have a factory variable margin of about 29 percent and a gross margin of about 18 percent.
According to the note, Tesla's gross margin comes in at 18 percent for a high-end Model 3, while the BMW 330i records 21 percent. The powertrain for Tesla's Model 3 costs $17,827, more than double BMW spends on the component.
"With these economics, we expect the $35k base Model 3 to lose about $6k/car," Langan said.
On Thursday, Evercore analysts said Tesla is on its way to make 8,000 Model 3 cars per week even as it burns more cash, following their visit to the electric carmaker's California facility.
Musk, who shocked markets last week after tweeting a proposal to take the company private, gave a wide-ranging and emotional interview to the New York Times on Thursday on the company's troubles and the personal burdens he has suffered running the company.
(Reporting by Nivedita Balu in Bengaluru; Editing by Bernard Orr)