Tesla’s Investor Day revealed a path to dramatically reduce production costs and increase volume with a third-generation vehicle platform. The company showed how the Model 3 already has a 5-year total cost of ownership lower than the world’s best-selling car, the Toyota Corolla. The base Model 3 sells in the US for $43,000 ($35,500 including the IRA tax credit), while the Corolla starts at $21,550.
Tesla’s current cost of production per vehicle is $39,000. During the presentation, Tesla demonstrated how streamlining vehicle design, battery and powertrain improvements, as well as revolutionary manufacturing techniques, will cut cost of production by 50%. This would put cost of production per vehicle at less than $20,000. A 20% gross margin would mean the next generation vehicle would sell for around $25,000, putting it in the same price category as the Corolla.
At this price, along with all the savings on petrol/gas and servicing, buying a Tesla over a Corolla becomes a no-brainer. Toyota executives have taken notice of Tesla’s advancements and recently said that the Model Y is “truly a work of art” and “It’s a whole different manufacturing philosophy”.
Toyota must act quickly to stay competitive in the EV market. If it fails to do so, the Corolla could go from the top-selling car to a relic in a museum. Tesla’s innovations have already revolutionized the auto industry and will continue to do so in the future. Daniel Bleakley is a clean technology researcher and advocate with a background in engineering and business. He has a strong interest in electric vehicles, renewable energy, manufacturing and public policy.
FAQ
Q1: Are electric car batteries recyclable?
A1: Yes, electric car batteries are recyclable.
Q2: Are electric car chargers free?
A2: It depends on the charger and the location. Some electric car chargers are free, while others may require a fee.
Q3: Can electric car batteries be rebuilt?
A3: Yes, electric car batteries can be rebuilt with the right tools and knowledge.
