Tesla cuts the cost of producing a car from $84,000 to $36,000

In the 10 years that Tesla has been a manufacturer that has gone from small to medium (since the Model S), growth has cost him huge amounts of money until economies of scale have been achieved. Tesla was without profit for 17 exercises, until the accounts began to come out. Five years ago, in 2017, Tesla was spending $84,000 to make each car, so it was mostly selling at a loss.

It has been revealed by the head of investor relations, Martin Viecha, at a technology conference organized by Goldman Sachs. In these five years, the costs have been going down and down, down to a very reasonable $36,000 on average. They could not sell the cars at that price, because in addition to manufacturing cars they have to pay payroll for the deployment of the Supercharger network, etc.

According to the executive, the metric of how much it costs to manufacture each car is going to become very important when it comes to mass-producing electric cars because the cheaper it is, the more profitable it will be. On the other hand, the cost reduction has not had to do with the batteries, but rather with the continuous improvements made in the production and engineering process to simplify steps and reduce time or material waste. And it can still improve, especially in qualities.

And yes, it’s possible to drop the $36,000 per car figure as soon as Giga Berlin and Giga Texas start hitting high volumes. It is not for nothing that Elon Musk referred to the underuse of new factories as “money incinerators” due to the constant supply problems that the industry suffers, although Tesla has been affected much less.

Tesla model s production

The growth of the electric car industry is linked to the ability to manufacture cars in high volume and at lower cost, with a sufficient flow of batteries and other components. He’s not inventing the wheel by saying this, but it’s a no-brainer to remember. And Tesla does not enter a more massive and lower-priced market due to its high demand for Model 3/Y:

“The [Tesla] Model Y is basically going to be the best-selling car of any type and any era in the world for the next year,” he said, which is a very strong word. It’s obvious that Tesla has become more resistant to supplier issues with its vertical integration, plus competitors aren’t particularly strong on volume yet. Well, for that they will have to make more than a million cars a year, and only of that model…

Elenor Kling

A tech lover and generally a car enthusiast who likes to do a lot of research and share knowledge.

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