Gary Zhou 
Key Points
- đźš— Tesla performed line upgrades at its production facilities in Q3 2023, leading to a temporary drop in production numbers.
- đź’ˇ These upgrades were aimed at enabling cost reductions in the production of vehicles.
- 🌍 The cost of goods sold per vehicle decreased to about $37,500 during the quarter.
- ⚙️ Tesla plans to implement other strategies to further reduce costs, such as using an 800-volt architecture for the Cybertruck.
- 🏎️ There are hints that Tesla might introduce a Plaid Model 3, despite previous statements to the contrary, potentially making high-speed electric vehicles more affordable.
Tesla explained the impact of the line upgrades it performed at various production facilities during the third quarter of 2023. The line upgrades, which CEO Elon Musk announced during the Q2 earnings call, were the cause of Tesla’s quarterly drop in production figures.
The Q2 earnings call in July detailed Tesla’s plans to shut down production at its factories temporarily to upgrade production lines.
With several new product offerings in the works, including the Cybertruck and a newly-designed Model 3, coined “Highland,” those who keep a close eye on the company’s lineup figured these upgrades would make way for these new cars.
“We continue to target 1.8 million vehicle deliveries this year, although we expect that Q3 production will be a little bit down because we’ve got some shutdowns to for — a lot of factory upgrades,” Musk said in July. “So, just probably a slight decrease in production in Q3 for sort of global factory upgrades.”
These shutdowns did not take long to be put into motion. Tesla’s Fremont, Texas, and Shanghai factories all had stoppages relatively soon after the automaker made the announcement, and drone operators at each factory updated others on what was going on, even as things slowed down at each of the plants.
Weeks later, Tesla ramped up production again at each of these factories, and the upgrades’ benefits were unknown.
At least, not until Tesla revealed the advantages during the Q3 earnings call on Wednesday.
Tesla said in its Shareholder Deck for the quarter that the upgrades were implemented to “enable further unit cost reductions” that would decrease the money it spent to build a vehicle. During the quarter, the cost of goods sold per vehicle decreased to roughly $37,500, it said.
The company went on to explain that, despite economic instability, which Musk mentioned multiple times during the call, this decrease in average vehicle cost is just the first step it has made toward decreasing the money it spends on building a unit.
It also plans to implement other strategies to decrease costs on other vehicles. For example, with the Cybertruck, Tesla will employ an 800-volt architecture because heavier vehicles see greater cost savings with high-voltage architectures.
