Tesla’s surprising new route to EV domination
IN 2011 TESLA stated an aim of becoming “the most compelling car company of the 21st century, while accelerating the world’s transition to electric vehicles”. At the time this was easy to dismiss as crackers. In the eight years since its founding in 2003 it had manufactured a piddling 1,650 EVs. Its first big-selling car, the Model S, had yet to hit the road.
Today it is almost as mad to argue that Elon Musk, the carmaker’s boss since 2008, has not achieved that goal. His company, a rare insurgent in an industry with formidable barriers to entry, has grown at neck-snapping speed. In the first quarter of 2023 Tesla’s Model Y mini-SUV was the world’s bestselling car. In the second quarter it delivered a total of 466,000 cars, beating analysts’ forecasts (see chart 1). Mr Musk’s promise of 2m sales this year, up from 1.3m in 2022, no longer seems fanciful. On July 15th its first Cybertruck, an angular, retro-futuristic pickup, rolled off the production line. Tesla is about to publicly unveil an expansion plan for its German factory, where it wants to double capacity to 1m vehicles per year.
Another route to higher sales is to launch new models, like the Cybertruck, or a low-cost mass-market vehicle—unofficially called the “Model 2” and with prices starting at $25,000—which Mr Musk has promised to start selling in the next couple of years. But new models come with new challenges. The relevant pickup market, with global sales of 1.3m, according to Bernstein, is relatively modest—and the Cybertruck’s bold styling may limit its appeal. And though low-cost Teslas could expand the company’s market beyond America, China and Europe, they will almost certainly generate lower margins, depressing the company’s overall profitability. Moreover, granting regional ventures greater autonomy to manage regional differences in taste, as established carmakers have long done, again adds complexity and costs.
2023-07-18 13:32:15
Link from www.economist.com
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