Genetec - A baby step

Author: Genetec A baby step   |   Latest post: Thu, 23 Mar 2023, 11:42 AM


Will Tesla make a low cost electric vehicle? We are about to find out

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It’s been the subject of speculation for several years. Can and will Tesla make a low cost electric vehicle, at half the cost of its current best selling EVs? What will it be called? A T2? And when will it be launched.

The approaching Tesla investor day in early March, and the company’s industry leading profit margins on its top selling Model 3 and Model Y EVs has rekindled speculation that Tesla can, and maybe will, unveil a new EV platform with a low cost, truly mass market EV in the future.

Tesla is not giving much away. During its Q4 earnings call last week, CFO Zach Kirkhorn told investors that Tesla is “continuing to ensure funding is prioritised for our long term roadmap”.

Kirkhorn went on to say this includes “development of our next generation vehicle platform” and that Tesla would be discussing these plans in more detail during its investor day, which is scheduled for March 1.

During Tesla’s Q3 earnings call in October last year, CEO Elon Musk revealed that the new platform will be smaller in size than the Model 3/Model Y platform. He also said that will cost the same to produce two units of the next-gen Tesla vehicle as it currently costs to produce a single Model 3.

This will be the company’s third vehicle platform, which has followed the trajectory of Tesla’s “Master Plan” which essentially moves the company from high-cost/low-volume to low-cost/high-volume designs. The first platform was for Tesla’s Model S and X, and the second platform is used for Model 3 and Y.

Musk has said that Tesla will produce the new platform vehicles in higher quantities than all other models combined.

There is still no detail on the what designs would use the new platform however there has been speculation that it could enable the production of a sub $US25,000 ($A35,000) model.

Last year Musk also hinted at the possibility of an autonomous people mover which could use the new platform.

One of the analysts pursuing these questions is Morgan Stanley’s Adam Jonas. He asked Musk at least week’s earnings call if the company was going to produce a profitable sub-$US25,000 EV, what he called a defining moment in the EV manufacturing industry.

Musk demurred. “If I were you, I’d probably be asking the same question. But we would be jumping the gun on future announcements.”

To enable such a dramatic cut in production costs Tesla will likely be using its huge single body castings which save on the welding and riveting of over 100 separate components to make car bodies.

Tesla’s high production volume, now over 1 million vehicles per year, and heading to 1.8 million in 2022, or more, will also enable significant reductions in costs.

The reality is that it is unlikely to be able to produce more given the supply bottlenecks, and probably doesn’t need to given the lack of competition at the low end of the EV market. When it does launch the new platform that will bring EVs to the masses, it will already be one step ahead of its rivals.


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