It costs Tesla $36,000 to make a car - cheaper model is still on the cards

At an invitation-only conference for Goldman Sachs bankers and investors, Tesla executive Martin Viecha laid out clear plans for the next five years. The biggest topics that Tesla wants to focus on are battery supplies and technology.

Tesla has the battery supply situation finally under control and it claims it has all the batteries it needs for the foreseeable future. This will shorten production times significantly since the battery supply is the choking point for the entire industry. Tesla is looking into its own lithium refinery and of course it will further improve its battery design and manufacturing.

Interestingly, Tesla confirmed the current cost of production per vehicle is $36,000 - a significant reduction from $84,000 recorded in 2017. None of the savings though are contributed to lower costs of batteries. Tesla credits its simplified production methods and new factory designs as the main contributors.

The company will explore manufacturing even further, hinting at new locations with Shanghai and Berlin being praised for their efficient operations and Fremont being called “not a great place to build cars.”

According to Mr Viecha, the automotive industry is on the cusp of a third manufacturing revolution. The first one was obviously the Model T from Ford and second credit goes to Toyota for its cheaper manufacturing technology. The electric vehicle architecture is so different from the combustion engine, it requires a new, possibly revolutionary approach to manufacturing.

Tesla is still planning to broaden its portfolio and although the cheaper vehicle is not a priority at the moment, it will still happen. There is even a rough timeline for that - before the recently announced robotaxi. While the Model S and Model X are the first generation of Tesla’s EV platform, Model Y and Model 3 are generation 2. The smaller future model and the robotaxi will be based on the new, 3rd generation platform.

Model Y has unexpectedly become a breadwinner for Tesla with a demand much stronger than the company expected. With the production across all the factories ramping up to their full potential, Model Y will - apparently- become the best selling vehicle of any kind of all time in the world. Big words from Mr Viecha but he has all the numbers to back up his claims. All we need is time to see if he was right.

The never ending story of FSD creeped up during the conference as well. The company reinforces its point that FSD is a “supervised” system that requires driver’s attention at all times and currently is available to about 100,000 drivers across the US. The word “supervised” was used quite a few times and this will most likely be the narrative from now on as it seems, Tesla did not hammer that point long or hard enough.

Tesla is monitoring the FSD rollout and is collecting an immense amount of data, it addresses all the issues and looks closely at the so-called interventions. The company believes the AI and mass data collection are the only way for widely available autonomous driving systems.

Strangely enough, there was very little talk about Tesla Semi and no mention at all of the Cybertruck but surely this doesn’t mean anything since the Cybertruck is on its way to production line and the Semi is getting ready to start hauling first loads across the country. Right?

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