Everyone watched the Tesla Investor Day livestream with bated breath to see the company’s new affordable vehicle, the Model 2 — and waited and waited. It never came, instead investors and observers were treated to a road map to Tomorrowland — and the stock is paying for it now.
The stock closed Wednesday at $202.77 and after nothing more than a few veiled references and plenty of rhetoric about making the world a better place, after hours traders beat the stock down overnight. It opened Thursday at $186.74.
After a bit of a rally, the stock has settled in at the $189-$190 range in lunchtime trading, down 6.5% on the day.
However, the company’s “Master Plan 3” did contain a few items that Tesla fans and investors should be pleased to hear, none more substantial than the claim the company will cut production costs by half, in large measure by simplifying and automating more of the assembly process.
Master Plan 3
During the event, CEO Elon Musk rolled out several members of the company’s top management to help flesh out the latest iteration of the “master plan,” including Franz and Lars, who talked in some detail about the company’s vehicle assembly process.
Some of that work is already in process, the pair noted, such as making the floor the vehicle battery.
“We simplified assembly with the Model Y’s structural battery, where we decided the floor should be a part of the car,” said Lars Moravy, Tesla’s chief engineer. “The battery is the floor. We put the seats in the interior on the battery, and we bring it up through a big open hole and we assemble it.
“This allowed us to do things in parallel, fully rethinking the process — and reducing the final assembly line by about 10%. And we thought maybe we could do this other places.”
Moravy went on to describe the assembly process for future EVs, which he called an “unboxed” model. He said it would deliver cut costs by snapping together sub-assemblies and reducing complexity and time in assembly.
Other executives came on to the stage to explain how the company cuts costs in other ways, such as eliminating sunroofs because no one used them. In all, they speculate they can cut the costs by half, much of that resulting in headcount reductions.
“It’s coming. They laid it all out. 50% less cost to build. Would get you a $25-$30k EV!” tweeted Tesla investor Ross Gerber, who is co-founder, CEO and CIO of investment firm Gerber Kawasaki.
Saying but not showing
While laying out how you can make a cheaper EV is fine for many, the massive turnout for the livestream hinged on the debut of the “$25,000 Model” that Musk touted in 2020. In fact, he predicted it would be a self-driving EV ready for this year.
Several of the executives who spoke made reference to the “next-generation” vehicle, adding it would be shown later this year. However, they spent much of their time make the case for an all-electric future.
A key component to that lower-priced, longer-range next-gen vehicle is Tesla’s new 4680 battery that the company is still struggling to scale up to full production. However, once the company gets that right, it opens up not only more possibilities for their vehicles as well as future cell development.
“This is the game changer. 4680 cell production,” Gerber tweeted. “They are still ramping and working on it. But the real deal is this. The size of the production area for these cells is way smaller than 2170. This allows them to scale way faster and easier.”
