CEO Elon Musk announced that production costs for Tesla’s third-generation electric car platform might be cut in half compared to those of the Model 3 and Model Y platforms currently in use. It is now reported that Tesla has continued developing its electric vehicle, as per Drive.
Production site
The smaller Tesla car is anticipated to have a hatchback body to compete with the Volkswagen ID.3. Meanwhile, its production will presumably take place in Giga Shanghai.
The Chinese factory produces Australia’s Model 3 and Model Y. Which Car reported that the annual capacity of Giga Shanghai is around 750,000 units. Remarkably, it has the largest installed capacity among Tesla’s facilities for its vehicle production.
However, the most awaited smaller Tesla car might also be made at other plants. For instance, the Model Y is produced in two US facilities (California and Texas), China and Germany.
Pricing
The cost of the smaller car may be reduced by 50%, making it available for as little as US$23,495 (AU$36,810). It costs 50% less than the least expensive Model 3 in the US. But for improved profitability, it will probably be priced at about US$30,000 (AU$47,000).
Launch dates
CEO Elon Musk announced last week to investors and the media that engineers are once more developing the smaller car. However, launch dates were not disclosed.
“We don’t want to talk exact [launch] dates, but this [new model] is the primary focus of our new vehicle development team,” said Musk.
“At this point, we’ve done the engineering for Cybertruck and for Semi, so obviously guess what we’re working on, the next-generation vehicle, which will be probably about half the cost of [the Model] 3/Y platform. It will be smaller, to be fair.
“But it will, I think … certainly exceed the production of all our other vehicles combined,” Musk claimed.
Tesla’s performance
Tesla delivered 936,000 vehicles the previous year. As of September 2022, Tesla has already sold 908,573 vehicles. At current manufacturing rates, the automaker is set to sell close to 1.3 million units by the end of the year.
In the US, prices for the Model 3 start at $US46,990 ($AU75,000). It is basically twice the price of Musk’s earlier predictions of a $US25,000 introductory price for the smaller car in late 2020.
However, CEO Musk’s remarks seem to simply be referring to production costs, leaving out Tesla’s profit margins. According to Forbes, the percentage of gross sales for Tesla vehicles from July to September 2022 was 27.9%, compared to 14% for other automakers.
Lars Moravy, VP of Vehicle Engineering, said, “We’re going to take everything we learned from S/X, 3/Y, Cybertruck, and Semi and pour it into that platform. As you’ve said to us many times, we’re on a 2-for-1 target, so, you know that implies trying to get to that 50% number again.”
“Yeah, it’s like […] How do we make two cars for the amount of effort it currently takes us to make one Model 3? […] And we do believe this can be done,” Elon added.
It is confirmed that Tesla is developing a more affordable vehicle that should be available to a broader market. Tesla could definitely gain high profit from the said smaller car if it materializes.
