Tesla promises to cut EV production costs in half, Musk hides affordable car plan

SAN FRANCISCO, March 1 (Reuters) – Tesla Inc ( TSLA.O ) plans to halve the assembly costs of future generations of cars, engineers told investors on Wednesday, but Chief Executive Elon Musk did not say when it would debut. Cheap electric vehicle.

Shares fell more than 5% in after-hours trading following the company’s investor day from its Texas headquarters.

More than a dozen Tesla executives, led by Musk, discussed everything from a white paper plan to embrace sustainable energy around the world to the company’s innovation in managing its operations from manufacturing to service.

The presentation featured an array of senior engineers, including new global manufacturing chief Tom Zhu, in a nod to Tesla’s effort to show the depth of its executive bench beyond Musk, the company’s face.

But there are no details on when the next generation cars will be launched and what models will be offered.

Musk was expected to launch a more affordable electric vehicle (EV) plan to expand his brand’s appeal and fend off competition.

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Executives said Tesla’s next-generation platform will include more than one vehicle built in standardized factories, but Musk brushed off questions about models in mind.

Tesla’s chief financial officer, Zach Kirkhorn, and others underscored their commitment to reducing production costs.

Kirkorn estimates that Tesla will need to invest six times more than it has so far to reach its long-term goal of increasing production to 20 million vehicles annually by 2030, a 10-fold increase from current capacity. The bill could be $175 billion, he said.

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The next investment step will be a new Tesla factory in northern Mexico, Musk said, announcing the first plant outside the United States, Germany and China.

Musk did not comment on a plan to revamp the Model Y sedan, Project Juniper, which Reuters flagged in a report on Wednesday in September.

The Cybertruck pickup is coming this year, says design chief Franz von Holzhausen.

mass market

Capturing the mass market is key to Tesla’s annual production target, which exceeds the combined output of the two largest automakers, Germany’s Volkswagen ( VOWG_p.DE ) and Japan’s Toyota ( 7203.T ).

That would make sales for Tesla nearly a quarter of last year’s total global car sales.

Musk has said the key to increasing Tesla’s sales volume will be lowering prices for consumers, with Tesla’s discounts this year fueling demand.

“The desire for people to own a Tesla is very high. The limiting factor is the ability to pay for a Tesla,” Musk said.

Tesla is the most valuable automaker, but its stock has fluctuated wildly. Shares have halved since their November 2021 peak, but have recovered more than 60% this year.

Musk said Tesla may need 10 models, with target production at 2 million sales per year for each model line. By comparison, Toyota sells 1 million Corollas annually worldwide.

Tesla is already ahead of its rivals in producing EVs at a profit. Chief engineer Lars Morawi says the company hopes to build its next-generation vehicles at half the price of the current Model 3 or Model Y.

Morawi described the manufacturing process for future EVs as he put together an “unboxed” model to reduce complexity and time in manufacturing.

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Tesla executive Peter Bannon gave an example of how the company is using data to cut costs. Customer data showed Tesla owners weren’t using the sunroof, he said, “so we removed it.”

Ross Gerber, Tesla’s top investor, tweeted that the presentation was a “big tease” at the next-generation vehicle. “It’s coming. They laid it all out. Cost 50% less to build. You get $25-$30k EV!”

Tesla has outperformed the industry in recent years, rapidly increasing deliveries despite the pandemic and supply chain disruptions.

But Tesla has cut prices in recent months to boost sales, pressured by a weak economy and growing threats from rivals in the U.S. and China.

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Tesla needs to improve its battery technology, which Musk called the “fundamental limiting factor” in the transition to sustainable energy and more affordable cars.

Tesla is struggling to ramp up production of advanced batteries called 4680s. Executives on Wednesday said volume production could hit this year, but said they were still testing two different production processes.

The stock has fallen 60% in the past year

Reporting by Hyunjoo Jin in San Francisco, Joseph White in Detroit, Akash Sriram in Bangalore, Abirup Roy in San Francisco and Kevin Krolicki in Singapore; Editing by Peter Henderson, Matthew Lewis and Himani Sarkar

Our Standards: Thomson Reuters Trust Principles.

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