An auto-manufacturing expert says Tesla has come a long way — but doubts Elon Musk will be able to make a compelling $25,000 car anytime soon
Mike Blake / Reuters
Elon Musk said last month that Tesla will sell a $ 25,000 car "in about three years".
The company has worked long and hard to cut its prices and announced several innovations to support it in its Battery Day presentation last month.
But these innovations may not be enough to create a vehicle that customers are still willing to pay for, says Sandy Munro, auto manufacturing expert.
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Elon Musk had many innovations to showcase at Tesla Battery Day in September.
Advances in battery design, chemistry, and even manufacturing processes should help the company lower costs while achieving higher overall performance and greater plant efficiency. Coupled with improvements to factory automation from the days of "manufacturing hell" and the infamous tent, Tesla should be able to produce a car that will sell for $ 25,000 in around three years, Musk said.
It would be the culmination of years of effort towards its goal of bringing EV costs down to affordable levels, but at least one manufacturing expert is skeptical of Tesla's ability to actually do this without fundamentally compromising.
"We were at $ 158 per kilowatt-hour when we made the Model 3," said Sandy Munro, Munro and Associates CEO and design prophet, on a conference call hosted by Bernstein analysts about his estimates when analyzing the vehicle.
"Now for the Model Y, we think it's about $ 108," he continued. "$ 108 is a big drop in two years, and that's because of the changes they made to chemistry and stuff like that. This one could fall to - I don't know - maybe $ 70 or so, $ 70 or $ 75 each Kilowatt-hour. That's a big step too, but at the end of the day, $ 20,000 vehicle or $ 25,000 vehicle, I don't see that. "
In essence, Munro argued that there are only so many things that need to be taken from a Tesla before it is no longer an attractive purchase. And with well-heeled competitors like Volkswagen focusing on the mass-market electric vehicle segment, Tesla needs to ensure that its future offerings continue to convince people in the market that an electric vehicle prefers it to an increasing number of options.
"We could always come up with this number," said Munro, "but would customers be satisfied with this number? That's the point."
Musk, who has long said Tesla's mission is to convert the world to sustainable energy, couldn't agree.
"We have to build more affordable cars," Musk said at the battery event. "One of the things that worries me the most is that we don't have a really affordable car yet, and we will do that in the future. But to do that we have to run the cost of running out of batteries."
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