Infineon to Supply Parts For Tesla's Model 3 Electric Car

Infineon to Supply Parts For Tesla's Model 3 Electric Car

Infineon Technologies have reached an agreement with American automaker Tesla to supply parts for its upcoming Model 3 electric vehicle. The German company’s products are already in Tesla’s Model S vehicle, as well as eight out of 10 of the world’s top selling EVs, and have now been confirmed for its latest mass-market electric saloon.

"We do not comment on the individual models, but we will also will be present in Model 3," Chief Executive Reinhard Ploss told Reuters after reporting third-quarter operating profit just ahead of analysts' expectations.

Infineon is a world leader in semiconductor solutions. The company’s quarterly operating income rose 33 percent to $400 million. Its product portfolio includes microcontrollers, intelligent sensors, powertrain, chassis and comfort electronics as well as driving safety applications.

The Model 3 has been marketed as Tesla’s cheapest car to date at just $35,000. For this base price, customers will get a Model 3 with 220 miles (322 km) of range. They say it costs half as much as some of its other models, with 500,000 people already on the waiting list for its 2018 arrival. However, according to TheVerge, the price rapidly increases if you require extras like longer range or a different coloured vehicle. They write:

“The truth is the Model 3 costs $40,000 if you want a standard version with autopilot (an extra $5,000) in black with no other options. If you want a different color, add $1,000. And if you want a longer range ($9,000) to get over 300 miles per charge instead of 220, well now we’re at $50,000.

"The Tesla Model 3 isn’t a luxury car, it’s a midsized car masquerading as one.”

The deal makes sense for both parties. According to the latest market report from IDTechEx, electric vehicles is forecast to be a $731 billion market by 2027, profoundly changing society by 2037. For Infineon, it also boosted shares, with stock up 1.7 percent by lunchtime (GMT) on Tuesday.  

Ploss said that, although the deal was a boost for the company, most of the demand for Infineon's electric vehicle parts would continue to come from Asia.

"Our success is very much dependent on Asia," he said.

Interestingly, he also said the company would “continue to explore various acquisition options.” He told reporters on a conference call that Infineon remained interested in deals in the American market, but would steer clear of technology that the government considers vital to national security.

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