Lower-Cost Tesla Will Outsell All Current Teslas Combined

During the Q3 2022 Tesla conference call, a question was asked regarding the on-again, off-again lower-cost Tesla vehicle that many people think is critical to Tesla reaching 10 million car sales a year, let alone the company’s targeted 20 million. An institutional investor asked, “The progression from Tesla’s first platform with S/X to the second platform with 3/Y led to a 50% reduction in COGS. When do you see Tesla’s third platform being released and what level of COGS reduction could you achieve?”

Tesla CEO Elon Musk’s response was: “Well, we don’t talk exact dates, but this is a — I mean, the primary focus of our New Vehicle Development team, obviously. At this point, we’ve done the engineering for Cybertruck and for Semi and, so, it’s obvious you can guess what we’re working on, which is this next-generation vehicle, which will be about half the cost of the 3/Y platform. It’ll be smaller, to be fair, but it will I think swiftly become — swiftly exceed the product of all of our other vehicles combined.”

Lars Moravy, VP of Vehicle Engineering, added, “Yeah, I mean, obviously we’re going to take everything we learned from S/X, 3/Y, Cybertruck, and Semi and pour it into that platform. As you’ve said to us many times, we’re on a 2-for-1 target, so, you know that implies trying to get to that 50% number again.”

Elon re-interjected himself: “Yeah, it’s like […] How do we make two cars for the amount of effort it currently takes us to make one Model 3? […] And we do believe this can be done.”

Managing Partner of The Future Fund, Gary Black, responded, “Perhaps the most important insight from the 3Q conf call: Production of the M-$30K car will exceed production of all other $TSLA models combined.” A former Tesla employee who worked for years on recruitment for the company also highlighted this note:

But it was one particular response from popular Tesla Twitter account Whole Mars Catalog that stood out — because it went beyond the normal commentary and also got a “like” on Twitter from Elon Musk.

The key note there that is different is that Elon Musk seems to confirm that this lower-cost Tesla will be for robotaxi service. (Not to say that Tesla’s larger vehicles, which offer more passenger and cargo space, won’t be use as robotaxis too if Tesla can solve self-driving tech challenges enough to get robotaxis approved.)

However, since that tweet, it seems that Whole Mars Catalog (aka Omar) has gotten a tip (perhaps from Elon) that this lower-cost Tesla won’t only be used for robotaxi service. A tweet from earlier today stated, “So apparently Tesla’s generation 3 vehicle platform isn’t just for the Robotaxi… there’s some other new vehicles that will be based on it too.”

So, yeah, robotaxis or not, Tesla is working on a lower-cost car that should be accessible to a much larger portion of the market. Right now, the cheapest Model 3 you can buy in the United States is $46,990. That’s far above its targeted intro price of $35,000, inflation or not. However, if Tesla can bring a car to market that costs half as much, that’d have a starting price of $23,500. That’s a mass-market car, a seriously mass-market car. While the Model 3 and Model Y can see millions of sales a year, a $23,500 Tesla could certainly see millions more than them. We will have to wait to see whether it really comes to market at about that price, when it comes to market, and in what regions it comes to market at that price.

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