Yahoo Finance Why a Tesla exec is predicting a bright future for the EV maker
At the Goldman Sachs tech conference in San Francisco yesterday, Tesla’s (TSLA.) head of investor relations, Martin Viecha, laid out a cheery future for the automaker.
His remarks were shared by Business Insider via an attendee at the event.
Viecha covered two big topic areas: the costs associated with making EVs, and the outlook for battery technology and the supply of materials. Highlights:
Automotive manufacturing gains are key
In the car business, gross margin is a big deal, basically measuring how much profit an automaker can extract from each car produced. Thus, Viecha said the per vehicle cost is the top metric to track in the coming years. Controlling costs would be the most important factor in how many cars an automaker could make—and how big a company, Tesla in this case, could become.
Example: Viecha said in 2017 it cost Tesla $84,000 to make a car. Now that cost has come down to $36,000 in recent quarters. Viecha said almost none of those cost efficiencies came from cheaper batteries; he attributed the savings from better vehicle design that made building the cars easier.
Viecha also said Tesla could further reduce the cost of its vehicles by building more in newer, more efficient, factories in Berlin, Austin and Shanghai. Viecha believes another revolution in automotive manufacturing is possible - following Ford’s Model T assembly line and Toyota’s cheaper “lean production” techniques.
"EV architecture is so different from internal combustion engine, it allows for a third revolution in automotive manufacturing," Viecha said.
An entry-level Tesla may be coming
Tesla CEO Elon Musk had promised to build a cheaper Tesla for the masses, one that costs around $25,000. The Model 3 was supposed to be in the $35,000 MSRP range; the cheapest Model 3, however, now costs around $47,000 per Tesla's website.
Viecha also, at the conference, addressed the possibility of producing a cheaper EV, claiming the company wants an entry-level car to broaden out its portfolio. Why? The cheaper EV is necessary for Tesla to be a high-volume automaker, Viecha said. (And would also be important to have in place before Tesla embarks on its robotaxi service.)
As for new models, Viecha said the current strong demand for the Model 3 and Model Y obviates the need for new product launches in the near term.
"Model Y will basically next year become the best selling vehicle of any kind of all time in the world," Viecha said, according to the Business Insider source.
Musk has also said that Tesla would not be debuting any new products in 2022.
Tesla battery supply is being met for the first time
Automakers across the board - from Ford, to GM, and Volkswagen - have said acquiring battery materials like lithium could be crucial for their success in transforming to EV production.
Tesla, which has a huge head start in building EVs, is also way ahead in battery production and supply.
Viecha said at the conference that the company has, finally, all the battery cells it needs for both car production and energy storage products like the Powerwall.
"For the first time I can remember, we can access all the supply we need for both businesses," Viecha said, per Business Insider’s source.
Viecha said the company was able to do this by expanding its battery partnerships beyond its original partner Panasonic, to other battery makers like China’s CATL and LG Chem. Viecha also said Tesla would add even more battery suppliers.
Viecha added that battery supply is the “most important part of how this industry can growth in the future,” along with acquiring and refining battery materials like lithium and nickel.
To that end Tesla just last week filed an application with the Texas comptroller seeking to build a lithium refining facility on Texas’s gulf coast.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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