Is it too expensive to buy a Tesla?

In just over a decade, Tesla has single-handedly accelerated the transition to all-electric transportation. Legacy automakers that once pooped the viability of electric vehicles (EVs) are now launching their own very attractive all-electric models. With the competition chipping away at, is Tesla’s catalog of 4 vehicles enough to maintain market dominance? And is the cost of the vehicle just a little too expensive for many people who would like to buy a Tesla?

An attendee at this week’s invitation-only Goldman Sachs Communacopia & Technology conference in San Francisco spilled the grains of Tesla at Business Intern. Tesla executive Martin Viecha revealed the automaker’s plans for the next 5 years as he spoke at the conference.

Trends and important metrics the company uses to gauge progress, what a robotaxi service and other possible company products might look like in the future, including what to expect when it s is a new, less expensive Tesla model, were particularly interesting.

As Head of Investor Relations, Viecha is responsible for providing the company’s management and board of directors with information on trends, shareholder concerns and competitor actions that may impact the company.

The architecture of electric vehicles, Viecha explained, “is so different from the internal combustion engine that it enables a third revolution in automobile manufacturing.” The first revolution was Ford’s Model T, and the second was Toyota’s streamlined production process in the 1970s. The third revolution in electric vehicle architecture depends on the intersection of battery power and of technology, which together dictate the cost of manufacturing electric vehicles.

Add a cheaper model, invite more people to buy a Tesla

Will Tesla bring a cheaper model into the range of vehicles it offers? Yes, well, one day. Viecha answered this question with an unequivocal “possibly”. The possibility of a more affordable Tesla EV is inescapable as the company wants to be a high-volume manufacturer. To become one, she needs a large wallet, which will require a cheaper offer.

This need for an affordable Tesla is so pressing that before its company-operated robotaxi service can be unveiled, a lower-priced model must be produced. “This is an important selling lever that we have never touched, but, in the future, we may stimulate demand in other ways,” Viecha explained.

The Model S and X are the first generation of Tesla’s platform. Models 3 and Y are the second generation. The robotaxi platform is generation 3, he explained.

The company’s acceptance that a cheaper model was needed was due in part to stronger-than-expected demand for the Model 3 and Model Y. The base price of the Model 3, the entry-level sedan , is $40,390. The price of the Model Y Long Range is $58,190. Constant orders for these models reduce the immediate need for a new model, Viecha was quick to note.

“The Model Y will become, basically, next year the best-selling vehicle of all time in the world,” the executive projected, mimicking a comment Tesla CEO Elon Musk made in 2021.

Key Elements of Tesla’s Manufacturing

After pioneering the current era in battery-electric transportation, Tesla wants to continue on that trajectory, Viecha said, pushing the boundaries of what it costs to produce an electric vehicle.

Cost per vehicle: Viecha explained that for Tesla to grow, the manufacturing cost per vehicle is the most critical aspect to keep under control. More important than any other metric, cost per vehicle determines how many cars companies can produce and how much overall growth the company can grow.

Battery supply: Viecha said battery supply is finally at a level where Tesla can buy all the cells it needs, which will reduce production times. Anticipating that the industry will grow in proportion to battery supply, he suggested that areas such as cell and battery construction, battery design, mining and refining of lithium, nickel and other raw materials will play a key role in Tesla and other electric vehicles. automakers’ ability to control costs.

Manufacturing: Tesla’s cost per car has fallen from $84,000 in 2017 to $36,000 in 2022, improving the company’s profitability. Stronger vehicle and plant designs prompted more streamlined manufacturing and capacity. Interestingly, few of the cost savings came from batteries. As the new facilities produce more cars, they will be able to manufacture each vehicle for less than $36,000, Viecha said.

Benefits of the new Gigafactories: Tesla’s original factory in Fremont, Calif., in the Silicon Valley region, is a less advantageous site to build company cars than its new Tesla factories, Viecha revealed, but the Fremont factory represents about the half of Tesla’s production. Shanghai and Berlin are more profitable places to build. (Viecha does not appear to have referred to the other new Gigafactory in Austin, Texas.)

Complete self-driving: Several details about Tesla’s Full Self Driving (FSD) software service have emerged. Viecha said “supervised” FSD, where drivers and software can intervene, is used on US city streets by about 100,000 people. “We deeply believe that massive data collection and AI are only the only way to solve widespread autonomy,” Viecha said. “That’s the path we’re taking.”

This “monitored autonomy” means that drivers must continue to be attentive; failure to do so could mean losing access to the service (which customers have paid several thousand dollars for – the current price being $15,000). Based on the data Tesla sees, supervised FSD could be rolled out across Tesla’s entire U.S. fleet by the end of this year, Viecha predicted. (Clean Technica Zachary Shahan’s own is one such beta user. He’s not quite as optimistic.) As Tesla collects more data on service calls, it fixes issues as they emerge, leading the company to roll out more updates. software updates to improve the system, based on feedback. This iterative process will eventually bring Tesla to full autonomy, Viecha explained. (If this week’s software update is any indication, there’s still a lot of data analysis and application work to be done.)

Final Thoughts

Viecha’s remarks seem to indicate that Tesla will continue to focus on the fundamentals that have already helped it achieve such remarkable success. From the beginning, Tesla has focused on 3 basic premises to establish its dominance in the market:

  • Continuously reduce manufacturing costs, including through robotics and in-house production, where possible.
  • Call across demographics with 4 S3XY models – Model S, Model 3, Model X and Model Y; a lesser pricing model may be part of future planning but is not imminent.
  • Work towards true autonomous driving (FSD) through research and data collection.

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