Cheaper EVs ahead, but Musk won't give details

Tesla will cut assembly costs by half in future generations of its cars, engineers told investors on Wednesday, but CEO Elon Musk did not reveal when it will debut a much-awaited affordable electric vehicle.

More than a dozen Tesla executives led by Musk discussed everything from a white-paper plan for the globe to embrace sustainable energy to the company's innovation in managing its operations from manufacturing to service.

The presentation featured an array of senior engineers, including the new global production chief, Tom Zhu, a nod to Tesla's attempt to show the depth of its top bench beyond Musk, the face of the company.

But there were no details about when next-generation cars would be launched and what would be offered. Musk had been expected to lay out a plan to make a cheaper EV that would broaden his brand's appeal and fend off competition.

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

Tesla's CFO Zachary Kirkhorn and others underscored their dedication to cutting production costs.

Kirkhorn estimated Tesla must invest six times more than it has to date to hit its long-term target of increasing output to 20 million vehicles annually by 2030, a 10-fold increase from current capacity. The bill could be $175 billion, he said.

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 plans to revamp the Model Y sedan in 2024 or a revamped version of its Model 3 sedan, which will go into production in September.

Capturing the mass market is critical to Tesla's annual production goal, which is more than the combined production of the two largest volume vehicle makers, Germany's Volkswagen and Japan's Toyota.

It would also represent a sales volume for Tesla of about a quarter of 2022's total global car sales.

Musk said the key to driving Tesla's sales volume would be bringing prices down for consumers, adding that Tesla's discounts offered this year had stoked demand. "The desire for people to own a Tesla is extremely high. The limiting factor is their ability to pay for a Tesla," he said.

Tesla is the most valuable automaker, but its stock has swung wildly. Shares are down about half from their November 2021 peak but have rebounded more than 60 percent this year.

Musk said Tesla could need as few as 10 models, which at target production would amount 2 million sales per year for each model line. By comparison, Toyota sells just more than 1 million Corollas a year globally.

Tesla has a lead over its rivals in manufacturing EVs at a profit. Chief Engineer Lars Moravy said the company expects to build its next-generation vehicles for half the cost of the current Model 3 or Model Y.He described a production process for future EVs an "unboxed" model of snapping together subassemblies to reduce complexity and time in production.

Tesla executive Peter Bannon gave an example of how the company uses data to cut costs. Customer data showed Tesla owners did not use the sunroof, he said, "so we removed it."

Reuters