Tesla is reducing manufacturing costs by a factor of more than two in just five years!

Tesla is reducing manufacturing costs by a factor of more than two in just five years!


Martin Viecha, who is responsible for investor care at Tesla, recently gave a behind-the-scenes look at the US electric car maker at a closed event. A guest at the event gave some of that information. He told BusinessInsidere how Viecha estimated the development of manufacturing costs and its importance to the company.

Viecha emphasized at the event that the manufacturing cost per vehicle is the most important measure to be monitored in the coming years as it is the factor that determines how many vehicles the company will manufacture and can grow in size. He also commented on the classification of developments at Tesla. In 2017, for example, it cost $84,000 to make a Tesla, and in the last quarter of 2022 costs had dropped to $36,000 per car.

What is exciting is the information that almost none of these savings have been achieved through cheaper battery costs. Instead, savings were achieved through improved vehicle design, which does its part to make production as easy as possible. Most important, however, is Tesla’s factory design, which increases the corresponding efficiency in the production process.

Choosing the right production site is also important, Viecha continues. Tesla’s first factory in Fremont, California, near Silicon Valley, is not a good place to build cars. Places like Shanghai and Berlin, where Tesla has built factories, are better options. Also a factory in Austin, Texas. It is planned that the cost screw will continue to be tightened to further reduce manufacturing costs.

The Fremont factory accounts for nearly half of Tesla’s production. When the new facilities produce more cars, they will be able to produce each car for less than $36,000, which should have a positive impact on Tesla’s profits, Viecha said. Hopes are rising for Tesla’s potential customers, who are sometimes put off by the price.

When asked about the possibility of Tesla making an affordable electric car, Viecha said the company ultimately wants to put a more affordable car on the road. If the company wants to become a mass car maker, it needs a broad portfolio, and Tesla needs a cheaper offering before launching its proprietary Robotaxi service. However, this probably won’t be on the road anytime soon. He justifies this by saying that demand for the Model 3 and Model Y was stronger than expected, reducing the need for a new model soon.

Source: BusinessInsider – A Tesla executive laid out the company’s next 5 years at an invitation-only meeting