If you have heard enough of Tesla earning calls and Elon's interview, he has heavy emphasis on four themes that will drive down costs in the future. The four biggest needle mover in terms of costs are:Elon has hinted a few times recently that there is a next-gen more affordable vehicle in the works. Assuming this vehicle is sold with a base around $25k to $30k, how do you think Tesla will be able to manufacture it to keep costs down far enough to extract a decent margin?
Some guesses, I really have no idea about manufacturing costs so I could be way off:
Smaller car with smallish battery (with future drop in pack costs) to get ~ 200 miles. Battery pack cost < $5,000.
Cheaper power train / electronics.
Less color options.
Cheaper manufacturing methods derived from Model 3 / Y experiences (i.e. reduced wiring)
Perhaps based margins will be low with expectation that EAP/FSD will have a high take rate.
Thoughts?
1. Economy of scale.
In the beginning of all manufacturing process, the fixed costs are a lot higher than marginal costs (look up in wiki if you don't know what this mean). But as volume of production get higher and higher, the marginal costs will start to drop significantly. Resulting in a lower unit cost per vehicle.
2. Lower cost of battery pack per kwh
This ties in to economy of scale as well. As production of battery pack increase and the battery technology get even more mature, the cost per kwh would drop exponentially. Along with smaller overall battery size, that would results in significantly lower battery pack cost.
3. Better vertical integration
Better integration such as building battery manufacturing and car manufacturing/assembly all under one roof. Such as the new plant in Shanghai and the future plants in US and Europe. As for the existing plants in California and gigafactory in Nevada, they would try to have better link up/transportation between the two facilities. Think of fleet of autonomous semi trucks travelling between the two facilities.
4. Efficiency gain through intensive robotic automation and increased efficiency.
He goes as far as saying that he see Tesla as more of an automation company rather than a car company. He is and will continue to improve efficiency through intensive robotic automation in all aspect of manufacturing. Much more than any other car companies, he claimed. As well as car manufacturing speed that will be many times higher than industry average.