During the recent FT Live’s Future of the car conference, interviewer Peter Campbell, a global motor industry correspondent, asked Tesla CEO Elon Musk about his recent Twitter acquisition and if this has had a commercial impact on Tesla.
Musk then responded that he was confident that Tesla could sell all of the electric cars that it produces. Musk said, “I’m confident that we will be able to sell all the cars we can make. I mean, currently, the lead time for ordering a Tesla is ridiculously low. Our issue is not demand. It is production.”
Currently, automakers face issues with supply chain and semi-conductor chip shortages, and this has dramatically affected interrupted ramp-up productions. Musk also implied that they might stop taking orders due to the high demand for Tesla EVs. Musk also said that even before the supply chain issues, the need for Tesla EVs was already high.
“Even before there was the supply chain issues, Tesla’s demand exceeded production. So now its demand is exceeding production to a ridiculous degree. We’re actually probably going to limit — just stop taking orders for anything beyond a certain period of time because some of the timing is like, a year away.”
REACHING THE GOAL OF 20 MILLION CARS PER YEAR
In Tesla’s 2020 impact report, Tesla highlighted that “by 2030, we are aiming to sell 20 million electric vehicles per year (compared to 0.5 million in 2020) as well as to deploy 1,500 GWh of energy storage per year (compared to 3 GWh in 2020).
During the FT interview, Campbell asked Musk about what the business would look like by 2030 to make 20 million EVs per year. In which Musk responded:
“The 20 million by 2030 is an aspiration, not a promise. And the reason for aiming for something like that is there are approximately two billion cars and trucks in the world and for us to really make a dent in sustainable energy and electrification, I think we need to replace at least one percent of the fleet per year to really be meaningful. And that’s where the 20 million units comes from.”
Notably, Tesla has already been working on this aspiration as it just recently opened its gigafactories in Berlin and Texas. There are also reports on Tesla expanding its Berlin factory and Shanghai factory.
Tesla’s goal of reaching 20 million units sold per year might not be too far since the demand is there and the transition to EVs is faster than years before. However, supply chain issues might hamper its production. Musk also noted that Tesla’s annual growth rates are faster than any large manufactured product in the history of the earth “I think the next fastest was the growth of the Model T, and we’re faster than the Model T. So, if that growth rate continues, then obviously we will reach 20 million vehicles a year. But we may stumble and not reach that goal. But I’d say it’s roughly equally difficult to have gotten to this point as it will be to get to 20 million.”
DEMAND FOR TESLA CARS
Demand for Tesla cars is exceptionally high right now. Last March, Tesla increased its prices across its entire lineup of electric vehicles. Prices have increased by at least 5-10%. There are also long waiting times for the cars as well. Not only that, Prices for second-hand Tesla cars are also high.
Last Month, Musk commented on the price increase during Tesla’s first-quarter earnings call. He noted that the waiting time for their cars is quite long, and as people place their orders, the waitlist extends. “So our prices of vehicles ordered now are really anticipating a supplier and logistics cost growth that we’re aware of and believe will happen over the next six to 12 months. So that’s why we have the price increases today because a car ordered today will arrive in some cases a year from now.” And as he said previously, the demand for Tesla cars is high. They are just limited in production.
