Connect with us

Hi, what are you looking for?

Image courtesy of Tesla


How Tesla Aims To Cut Manufacturing Costs In Half

Tesla’s recent Investor Day event brought with it a few announcements, including the automaker’s plans to construct a new Gigafactory in Mexico. The plant comes as a part of Tesla’s hopes to increase its production numbers even more than it has in the last few years — and ultimately to reduce its manufacturing costs in the coming decade.

At the event, CEO Elon Musk told shareholders that Tesla expects to cut manufacturing costs in half, partially through an updated set of manufacturing processes, and through its next-generation vehicle platform planned for production at Giga Mexico. In the next decade, Tesla hopes to reach an annual production capacity of 20 million units, far higher than the 1.3 million sold in 2022.

That scale of production is expected to help Tesla unlock vehicles with sub-$30,000 sticker prices, comparable to a traditional gas car such as the Toyota Corolla. Additionally, this is thought to help increase mainstream electric vehicle adoption, as more and more consumers are able to afford the updated pricing models.

“The desire for people to own a Tesla is extremely high,” Musk said at Investor Day. “The limiting factor is their ability to pay for a Tesla.”

Many have referred to the concept of an affordable Tesla as the “Model 2,” and analysts expect it to cost between $25,000 and $30,000. Analysts with investment firm Bernstein have pointed to the competition Tesla is already facing and aren’t fully convinced the automaker will reach its targets on upcoming sales goals.

“Tesla is unlikely to ramp up new models fast enough to meet volume expectations of 2.4 million in 2024, especially since the next-gen platform appears to still be in the design phase,” Bernstein wrote (via Automotive News). “Moreover, we believe that price cuts underscore the highly competitive nature of the auto market, where sustained high margins and high volume is unprecedented.”

The plan to shift toward becoming a higher-volume auto manufacturer was discussed by several Tesla executives at Investor Day. In addition, one of Musk’s past “Master Plans” for the automaker detailed the company’s long-term strategy of selling one vehicle, then using the profits to create a more affordable car, then doing the same with the profits from that vehicle to make an even more affordable car, and so on and so forth.

Higher volumes of auto production mean lower manufacturing costs, as pointed out by, Lars Moravy, Tesla’s vice president of vehicle engineering. During the event, Moravy emphasized how crucial manufacturing and a new-generation EV platform would be to the company’s ability to deliver on long-term production targets.

“If we are going to scale the way we want to do, we have to rethink manufacturing again,” Moravy said. “As part of the master plan, we have to make a step change in cost.”

Originally published on EVANNEX. Written by Peter McGuthrie.

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don't like paywalls, and so we've decided to ditch ours. Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It's a never-ending Olympic challenge to stay above water or even perhaps — gasp — grow. So ...
If you like what we do and want to support us, please chip in a bit monthly via PayPal or Patreon to help our team do what we do! Thank you!
Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Written By

We publish a number of guest posts from experts in a large variety of fields. This is our contributor account for those special people, organizations, agencies, and companies.


You May Also Like


Tesla has become nearly debt-free in just two decades, a feat that’s unheard of in the auto industry’s more-than-century-old history. How the electric vehicle...

Clean Transport

One of the big “gotchas” the anti-EV crowd tries to throw at EVs is that they’d fail you in a hurricane evacuation. I’ve covered...


It seems like most Americans are routinely hounded by annoying, scammy, spam phone calls telling you that you need to buy an extended warranty...


Long distances, oilfields, and low salaries abound south of the Rio Bravo. If you ask me, it’s mainly these three conditions that have marked...

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.