Wednesday, March 1, 2023, may be an historic day for humanity. That is the day Tesla plans to unveil is Master Plan Part III. The Great And Powerful Musk has promised it will be a blockbuster event.
Master Plan 3, the path to a fully sustainable energy future for Earth will be presented on March 1.
The future is bright! pic.twitter.com/11ug0LRlbD
— Elon Musk (@elonmusk) February 8, 2023
Speculation is rampant that part of Investor Day 2023 will be the announcement of a third-generation Tesla electric vehicle platform which will represent a step change in automobile manufacturing. In fact, it could be a tidal wave event akin to Henry Ford’s original idea to make cars on an assembly line using standardized parts. The rumored new chassis would make use of injection molded structural elements that will slash the costs of production and make Tesla the most profitable automaker in history. It already makes nine times more money on each car sold than Toyota does.
Last month, Morgan Stanley auto sector analyst Adam Jonas, who has always been a Tesla champion, said in a research note that Tesla is now his top automotive stock pick. “Tesla’s recent price cuts are just the latest sign the EV market may be entering the ‘shake-out’ phase,” he wrote before adding the EV market is shifting to an era of under-supply to potential over-supply, marked by shorter delivery times, price cuts, and falling used car values. “[Tesla] still offers approximately 50% upside at materially lower execution and dilution risk vs peers,” the note said.
Writing in The Driven, Daniel Bleakley says the factor that will make Tesla king of the mountain is not lower battery prices, it is Tesla’s dramatically lower costs of production. “More and more evidence suggests that Tesla’s Investor Day event this week will mark the beginning of a new era in automotive manufacturing. One in which EVs are not only much cheaper to run and maintain than petrol and diesel cars, but also cheaper to make,” he says.
Cost Of Goods Sold
In the run-up to Investor Day 2023, Adam Jonas points out that Tesla’s current cost of goods sold using the second-generation platform that forms the basis of the Model 3 and Model Y is $39,000 per vehicle. He says the Tesla factory in Germany is producing 90 cars an hour and needs only 10 hours to manufacture each one. By comparison, each ID. vehicle Volkswagen produces in Zwickau requires 30 hours to manufacture. He expects that Tesla on Wednesday will unveil its third-generation platform, which he believes will lower the cost of goods sold to around $25,000. (Related story: Sandy Munro: How Tesla Gets To The $25,000 Car)
How is that possible? By a concept Musk calls “the best part is no part.” It’s an idea common in the computer industry but largely unknown in the auto industry. Using high-pressure injection molding machines is part of it. So is offering just a limited range of models. Building the same cars over and over again is simply less expensive than building a blizzard of models with an almost infinite number of options. All that complexity interferes with production efficiency, which raises costs. Eliminating redundancy and complexity is the driver of the manufacturing breakthroughs we expect to be announced on Investor Day.