Auto industry: Tesla announces cost cuts without specific details

At an investor day, Tesla boss Elon Musk failed to provide the details he had hoped for about future models from the electric car manufacturer.

Auto industry: Tesla announces cost cuts without specific details

At an investor day, Tesla boss Elon Musk failed to provide the details he had hoped for about future models from the electric car manufacturer. Investors were accordingly unimpressed: The price of Tesla shares fell by around five percent in early US trading.

Tesla's chief engineer Lars Moravy said that the production of the next generation of vehicles could cut costs by up to 50 percent. That would bring a $25,000 model closer that Musk once envisioned. In the past few weeks, Tesla had lowered the prices for its current vehicles, some of them significantly, which raised the question among industry observers whether Musk was initiating a price war with efficiency increases behind him. At the event at night, he emphasized that the price is the biggest obstacle for many to buying a Tesla car.

Musk had also discussed a vehicle specially designed for robotaxi services in recent months. In the more than three-hour presentation, two models were shown on the screen only veiled. Details on future vehicles should be given in separate presentations. An additional plant is to be built in Mexico for their production, but there were no concrete details about the factory either. The next vehicle platform should again provide the basis for several models.

Sustainable future with renewable energies

At the event, Musk presented his third "master plan," as he calls the strategy announcements for the future. One core this time was the idea that with the extensive electrification of the economy, a sustainable future with renewable energies would be possible. Tesla wants to play an important role in getting there, up to and including potentially entering the heat pump business, Musk said. The group not only offers electric vehicles, but is also active as a provider of energy storage systems for private households, especially in the USA. The next generation of Tesla motors should also do without rare earths.

Musk has had a mixed record of previous master plans. The first came with the large-scale production of electric cars. The second, which envisaged a massive expansion of the model range, a thriving solar business, self-driving cars and a robotaxi platform, remains largely a paper plan.

Tesla managers, to whom Musk gave a lot of space during the presentation, also described how the company relies on software and the evaluation of data. For example, the automatic seat belt tightening was adjusted based on information collected in accidents. Software lifts some models from bumps in the road - because they know where they are from data from other Teslas. When components are installed in the factory, the on-board computer immediately tests whether they are working correctly.

By 2030: Annual production of around 20 million electric vehicles

Tesla reported deliveries of around 1.3 million cars for 2022. One goal is to produce around 20 million electric vehicles per year by 2030. That's going to be expensive: Tesla's chief financial officer, Zach Kirkhorn, estimated that the company would need to invest six times more than it has been doing to reach that long-term goal. The cost could be as high as $175 billion, he said.

Tesla confirmed that production of the Cybertruck, which was presented in 2019, should start this year after several delays. Musk had last promised larger quantities for 2024. Pick-ups are the most important segment in Tesla's home market USA, which is dominated by top dogs like Ford.

Tom Zhu, who is responsible for global production in the group, pointed out that Tesla had produced a total of four million cars to date. "It took us 12 years to build the first million and about 18 months to build the second million. It took us 11 months to build the third million. Then it took us less than 7 months to build the fourth million."

Tesla currently has a production capacity of almost two million vehicles per year. Compared to traditional automotive groups, this is comparatively little. In its best year, Volkswagen produced almost eleven million vehicles.