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One of the more interesting topics discussed during the Q3 2022 earnings call was the mass-market electric vehicle that Tesla is supposedly working on. According to Musk, the company has nothing else on its plate, considering that the development of the Semi and Cybertruck has ended.
It was part of the initial plan: build the Roadster and sell it to the wealthy to finance a more popular electric vehicle, like the Model S. Take the money and create a more affordable model. The Model 3 should’ve been the mass-market electric vehicle everyone should’ve afforded had Musk not fallen for the money and sold it to the rich.
With every other plan wrapping up soon, the proverbial plate Musk loves talking about is now empty. It’s about time Tesla considers an even more affordable EV, perhaps the $25,000 model rumored before. Tesla is certainly in a good position to achieve this, considering the insane operating margin it reported just a few days ago. According to the Q3 2022 Shareholders Deck, Tesla’s operating margins in the third quarter reached 17.2%, more than any other car maker in the world.
The good news is that Tesla is indeed considering a more affordable EV platform as its next project, as Elon Musk confirmed during the Q3 2022 earnings call. This was a surprise since Musk said that a $25K Tesla doesn’t make sense when the company cannot build enough of the $50K electric vehicles. And yet, the goal for Tesla’s next-generation EV platform is to halve the costs compared to the Model 3/Y platform.
“It’s the primary focus of our new vehicle development team, obviously,” said Musk. “At this point, we are done with the engineering for Cybertruck and for Semi. So, it’s obviously what we’re working on, the next-generation vehicle, which will probably be about half the cost of the 3 and Y platform. It will be smaller, to be clear.”
The goal is not only to halve the costs but also to yield twice the volumes, or at least more than all of Tesla’s other vehicles combined. For that, Tesla would need to take everything it achieved with the current production models and apply it to the new platform. That means every cost-cutting measure, starting with the mega-castings and LFP batteries, and going down to less complexity and more readily available materials.
Even so, we doubt a $25,000 EV is still possible at this time. If you remember, the Model 3 was supposed to be a $35K EV when it launched, but its price quickly ballooned to today’s price of $47K. Even if production costs could be pushed below $25,000, I doubt Tesla would sell it for less than $30K, considering the insane margins it’s used to at the moment.
With every other plan wrapping up soon, the proverbial plate Musk loves talking about is now empty. It’s about time Tesla considers an even more affordable EV, perhaps the $25,000 model rumored before. Tesla is certainly in a good position to achieve this, considering the insane operating margin it reported just a few days ago. According to the Q3 2022 Shareholders Deck, Tesla’s operating margins in the third quarter reached 17.2%, more than any other car maker in the world.
The good news is that Tesla is indeed considering a more affordable EV platform as its next project, as Elon Musk confirmed during the Q3 2022 earnings call. This was a surprise since Musk said that a $25K Tesla doesn’t make sense when the company cannot build enough of the $50K electric vehicles. And yet, the goal for Tesla’s next-generation EV platform is to halve the costs compared to the Model 3/Y platform.
“It’s the primary focus of our new vehicle development team, obviously,” said Musk. “At this point, we are done with the engineering for Cybertruck and for Semi. So, it’s obviously what we’re working on, the next-generation vehicle, which will probably be about half the cost of the 3 and Y platform. It will be smaller, to be clear.”
The goal is not only to halve the costs but also to yield twice the volumes, or at least more than all of Tesla’s other vehicles combined. For that, Tesla would need to take everything it achieved with the current production models and apply it to the new platform. That means every cost-cutting measure, starting with the mega-castings and LFP batteries, and going down to less complexity and more readily available materials.
Even so, we doubt a $25,000 EV is still possible at this time. If you remember, the Model 3 was supposed to be a $35K EV when it launched, but its price quickly ballooned to today’s price of $47K. Even if production costs could be pushed below $25,000, I doubt Tesla would sell it for less than $30K, considering the insane margins it’s used to at the moment.
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