Tesla’s Five-Year Plan: Steady As She Goes
Tesla executive Martin Viecha has reportedly shared some of the automaker’s short-term goals with investors during an invite-only Goldman Sachs tech conference held in San Francisco on Monday. As the company rarely engages in any form of public outreach and scrubbed its PR department in 2020, leaks from the event immediately became newsworthy.
But there wasn’t much new on the docket. Tesla still seems to be focused on the same issues that have been driving it since the company started trading in 2010. Though the conference has allowed us to glean where leadership sees the industry heading and Viecha – who heads investor relations – claimed that the per-vehicle cost of manufacturing will ultimately become the most important metric when determining the well-being of a specific automaker in the coming years.
Idyllic margins have always been important to the industry. This is one reason you’ve seen small, well-equipped cars stripped from our market over the years. They don’t offer manufacturers the same return on investment that crossovers can. EVs are no different and allegedly hold the potential for even lower overhead in terms of production. Granted, batteries are still quite expensive and may become even pricier depending upon the availability of raw materials. But Tesla flexed by sharing just how much its own production costs shrank over the last several years.
Viecha said it cost Tesla $84,000 to produce every vehicle it made in 2017. These days, the number was said to be closer to $36,000 per car with the executive saying it had basically nothing to do with battery cost.
The media was quick to pick up this point, sharing numerous articles without realizing that Tesla also started building the much-cheaper Model 3 in 2017. This alone could account for the drop in production costs. Prior to that, Tesla only manufactured the Model S and Model X – both of which can easily be optioned to surpass six figures.
Though Viecha also noted that the company had made great strides in terms of manufacturing prowess, stating that its initial facility in Fremont, California, represented a learning experience. Business Insider quoted the executive as saying the company has learned it’s much cheaper to build cars in places like Berlin and Shanghai than in sunny California. As more factories go up, he likewise believed synergies would continue to drive down production costs. However, some of that would also come down to the progress of connected-car technologies, data management, and autonomous driving.
“EV architecture is so different from internal combustion engines, it allows for a third revolution in automotive manufacturing,” Viecha was quoted as saying, noting that the other two were Ford’s delivery of the Model T and streamlined production efforts pioneered by Toyota in the 1970s.
He then asserted that industry growth would ultimately be determined by battery supplies and securing the necessary raw materials that have to be mined. But added that it’s not the only subject on Tesla’s mind. The company is allegedly still committed to delivering a robo-taxi service by 2024 and has no plans of abandoning its self-driving aspirations. It just needs more data (which is sourced primarily from customer vehicles) before Full-Self Driving (FSD) is ready for the big time.
"We profoundly believe mass collection of data and AI is [the] only way to solve generalized autonomy," Viecha said. "That's the path we're taking."
That said, the executive suggested that Tesla could potentially roll out a “supervised” version of FSD by the end of 2022. But it’s difficult to believe, considering just how often the company claimed a major breakthrough was around the corner. Surveys have also started to indicate that the public is becoming increasingly dubious about the prospect of autonomous vehicles ever coming to fruition in a manner that actually benefits drivers.
That kind of leaves Tesla’s five-year plan looking kind of lean. These are all things we’ve heard before and were told would already be made readily available by now. The company is focused on data acquisition and building more cars in more places so they can be sold to more people. But there doesn’t seem to be much going on in terms of new product development. In fact, quotes from Viecha make it sound like the company thinks offering another new car (other than the robotaxi) would be pretty dumb at this juncture. Nothing seems to have been said about the presumed arrival of the Tesla Roadster or Cybertruck either.
"Model Y will basically next year become the best selling vehicle of any kind of all time [sic] in the world," the executive said.
Then he noted that the above statement includes the elevated production costs associated with California and no real emphasis on leasing. But that may soon change.
"This is an important sales lever that we've never touched, but in the future we might be boosting demand in other ways," Viecha stated.
Since these are third-hand accounts, I wouldn't utilize the above to make any important financial decisions unless you were invited to the meeting. But Tesla is famously cagey and unreliable when it comes to sharing development plans (not that the rest of the industry is much better). This might be the best insight we regular people will receive for a while.
[Image: JL IMAGES/Shutterstock]
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A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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