Elon Musk Wants To Sell 20 Million Vehicles Per Year

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Elon Musk Wants To Sell 20 Million Vehicles Per Year
09 Mar 2023
6 min read

News Synopsis

By the end of the decade, Elon Musk hopes to sell 20 million Tesla cars annually. So it was strange that its eagerly anticipated plans for a  low-cost electric vehicle were a complete no-show at Tesla's newest master plan announcement in Texas last week.

A more affordable Tesla would be a definite way to attract a new group of potential customers. Instead, Tesla's CFO declared at the event that the company would concentrate on the "efficiency" that is currently highly popular in Silicon Valley in order to raise the $175 billion needed to make the necessary expenditures to reach its 20 million car per-year target.

At a Morgan Stanley conference last week, Tesla's CEO Elon Musk hinted that there was a "clear path" to "a smaller vehicle that is half the production cost of the Model 3," the company's entry-level model with a starting price of about $43,000.

Even said, it is evident that Tesla still has a long way to go before achieving Musk's goal given that it delivered almost 1.3 million vehicles last year. Where exactly should it begin in order to become more effective? With batteries, perhaps the most expensive EV component of all.

According to Benchmark Mineral Intelligence CEO Simon Moores, "To truly build a sustainable low-cost EV, a number of cost controls need to be implemented across the supply chain,"  in order to develop a really viable low-cost EV. None more so than batteries, which Tesla did not sufficiently highlight at Investor Day.

Lithium is likely the most important of the key metals needed for batteries, the rechargeable workhorses of EVs that essentially power the entire vehicle. Battery cost constraints have become a headache for Tesla because of record-high lithium pricing and a wide supply chain that dates back to China.

Musk needs to work hard to reduce the price of batteries if he wants to provide EVs that are affordable for everyone. Failing to do so runs the risk of handing the market over to roving rivals. Yet Tesla has a clear path to growth if it can pull it off.

Although Tesla used last week's event to announce new initiatives to help its effort to make affordable EVs, such as a new $5 billion Tesla gigafactory in Mexico, it didn't really explore strategies to lower the high costs of its battery raw materials, including lithium.

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