Cost Of Making A Tesla Down 57% From 2017: Senior Executive Outlines How This Happened

Zinger Key Points
  • Martin Viecha, Tesla’s vice president, reportedly said cost of making an electric vehicle will come down further.
  • The new factories could help improve profitability of Tesla, he says.

One of the main reasons for the relatively slow adoption of electric vehicles (EVs) is affordability, said a Tesla, Inc. TSLA executive on Monday, while emphasizing the significant reduction in cost the company has been able to achieve while manufacturing EVs.

What Happened: The cost of making a Tesla car is now $36,000, down markedly from $84,000 in 2017, said Martin Viecha, Tesla’s vice president of investor relations, at a Goldman Sachs tech conference, according to Business Insider.

The cost savings, according to the company, did not come from cheaper battery prices but from better vehicle design, which simplified manufacturing, and new factory design.

Tesla’s Fremont plant isn’t a “great place” to build cars and there are cheaper places, including Shanghai and Berlin, Viecha reportedly said. He added that the company wants to continue this trajectory, pushing the boundaries of how much it costs to make an EV. As new factories ramp up, they should be able to make cars for less than $36,000, which should boost Tesla’s profitability, he said.

See also: Tesla Has Access To All The Battery Cells It Needs For First Time Ever, Says Senior Exec: Report

Calling Ford Motor Company’s F Model T and Toyota Corporation’s TM cheaper production approach in the 1970s as two major revolutions in vehicle manufacturing, Viecha said EV architecture, which is entirely different from internal combustion engines, should pave the way for a “third revolution in automotive manufacturing.”

Price Action: After closing Monday's session 1.58% higher at $304.42, Tesla stock added 0.22% in premarket trading on Tuesday, according to Benzinga Pro data.

 

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