The electric auto manufacturer is focusing on the fundamentals that led to its current success.
Tesla has achieved astonishing success in a relatively short time on the market. Its electric vehicles have outperformed legacy automakers in numerous key markets around the world, despite the fact that Tesla has a very small range of just four vehicles at present. But the competition is catching up, so what's next for Elon Musk's controversial company?
Speaking at an invite-only Goldman Sachs tech conference in San Francisco on Monday, Tesla executive Martin Viecha revealed the automaker's plans for the next five years. One of the attendees has outlined the key points to Business Insider, and it seems that Tesla will continue to focus on the fundamentals that have helped it achieve such remarkable success already.
Viecha said that battery supply is finally at a level where the automaker can purchase all the cells it needs, which will reduce production times. He added that the per-vehicle cost of manufacturing is the most critical aspect to keep under control for Tesla to grow. In 2017, producing each car cost Tesla $84,000, but recently, that has dropped to $36,000 per car. Better vehicle and factory designs that have made manufacturing as simple as possible, not lower battery costs, are what got Tesla to this point.
Tesla wants to continue to reduce costs, and Viecha noted that Shanghai and Berlin are cheaper places in which to manufacture cars than America. With more facilities producing more cars, Tesla wants each car to cost less than $36,000 to manufacture, improving the company's profitability.
"EV architecture [...] allows for a third revolution in automotive manufacturing," said Viecha, referring to Ford's Model T as the first and Toyota's streamlined production process of the 1970s as the second.
Speaking of reduced costs, CEO Elon Musk said earlier this year that a $25,000 car was not a priority. Viecha revealed that automakers need a broad offering to sell high volumes of cars, and Tesla needs a cheaper product before its robotaxi service rolls out, which is currently planned for 2024. However, demand for the Model 3 and the Model Y has been stronger than the brand predicted, which means that Tesla feels no pressure to reduce the average cost of its cars.
"Model Y will basically next year become the best selling vehicle of any kind of all time in the world," said Viecha, adding that this is despite elevated costs from the Fremont factory and almost no leasing. Viecha recognizes the potential for leasing to boost demand, and Tesla will consider this and other strategies in the future, but don't hold out on buying a Chevy Bolt because you're expecting a "Model 2" or something in that vein.
The next big question is that of autonomous driving technology, specifically the automaker's semi-autonomous but inaccurately named Full Self-Driving (FSD) system. Viecha says that around 100,000 people are using FSD on US city streets, but the system is still "supervised autonomy," where drivers need to be ready to intervene. These interventions help refine Tesla's software as each one is recorded. This collected data is used to roll out software updates, as we know, and as more data is collected, Tesla gets closer to its goal of true autonomy.
"We profoundly believe mass collection of data and AI is [the] only way to solve generalized autonomy," proclaimed Viecha. "That's the path we're taking."
He added that the Model X and S are considered the first generation of Tesla's platform, with the Model 3 and Model Y the second. The robotaxi will be the third.
In summary, Tesla will continue to follow the principles that have led to its success thus far, and further streamlining mass production is the chief concern.