During Tesla’s Head of Investor Relations Martin Viecha’s presentation at the recent Goldman Sachs technology conference in San Francisco, the executive shared several important tidbits of information that are relevant to the electric vehicle maker’s plans for the future. These include, among other things, a kind of “third revolution” in car manufacturing.
Viecha noted that in the past 120 years of the automotive industry, there have only been two revolutions in vehicle manufacturing. One happened in the early 1900s when Ford introduced the Model T, and the other happened in the 1970s when Toyota, through hard work and optimization, found a way optimize vehicle production costs.
But electric vehicles are a completely different animal, so the opportunity for another revolution in vehicle manufacturing is there. “The EV architecture is so different from the internal combustion engine. It enables a third revolution in automotive manufacturing,” Viecha said.
The Tesla executive highlighted why it’s important for automakers to optimize their manufacturing costs, noting that the cost of production per vehicle would be the most important metric to watch in the electric vehicle industry in years to come. This, according to Viecha, would be the deciding factor in determining the number of cars companies can make – and the size of automakers.
Tesla has made a lot of progress in this direction. According to Viecha, it cost Tesla $84,000 to produce each car in 2017. In recent quarters, that number has been reduced to $36,000 per vehicle. What’s important to note here is that almost none of these savings actually came from cheaper battery costs – they were simply the result of Tesla’s ongoing efforts to improve the design of its vehicles to make manufacture as simple as possible. The introduction of factories specifically designed for the production of electric vehicles has also helped a lot.
Viecha’s colon has been found in Tesla’s strategy in recent years. With the Model Y, Tesla began using megacasts, which drastically reduced the number of components used in the production of a vehicle. Tesla’s use of megacasts has garnered huge praise, and other automakers such as Volvo have hinted they also intend to follow a similar strategy in the near future.
Tesla’s Fremont factory is a perfect example of Viecha’s second point. The factory, which Tesla acquired in 2010, is a facility that was in no way designed for electric vehicles. Tesla’s new factories like Gigafactory Shanghai, Giga Berlin and Gigafactory Texas, on the other hand, are specifically built to optimize the production of all-electric vehicles. The production of Giga Shanghai, which recently overtook the Fremont plant, is proof that the idea of Tesla’s dedicated electric vehicle factory is valid.
What’s interesting is that Tesla is a company known for pushing innovation even though its vehicles are already industry-leading. It’s something that was hinted at by the Tesla executive, who noted that as the company’s new factories produce more cars, manufacturing costs per vehicle could drop even lower than 36,000. $ – and that’s before the lion’s share of battery savings from the company’s 4680 program. kick in.
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