GAMECHANGER $19,999 Tesla May Come Sooner than Anyone Expects - Goodbye ICE Cars

in 2016 elon musk promised consumers and investors a 35 000 tesla even before the fremont facility was ready to begin producing the model 3. this was supposed to be the electric car that would appeal to the mass market and at thirty five thousand dollars would be entirely affordable especially in the united states the world's second largest car market where the average price of a car was around the thirty two thousand dollar range however it was more difficult than elon musk had anticipated to achieve this low price point back in 2019 he stated it's excruciatingly difficult to make this car for thirty five thousand dollars and still be financially sustainable musk said eventually tesla was able to price the bare bones standard range model 3 at 35 000 on the company's website for a short period of time before it was moved off menu and replaced with the standard range plus for a few thousand dollars more the standard range was barely acceptable by elon musk's standards meaning that it was difficult for tesla to offer the value that people expect at such a low price currently the cheapest vehicle that tesla sells is the standard range plus model 3 which sits at 39 990 part of the recent increase price can be attributed to rising raw material costs as the pandemic subsides however the average price of a new vehicle in the united states appears to have now surpassed forty thousand dollars as demand comes back online but supplies are still dwindling due to worldwide shortages this technically means that the price of an electric vehicle is now cheaper than the average gas powered car but if tesla could make a breakthrough in cutting ev costs down then a significantly lower priced electric vehicle isn't out of the question a car that's half the price of the current standard range plus model 3 say a 19 999 dollar car would decimate the gas car market and be able to achieve high volumes to transition the world to electric even faster which is tesla's primary goal if we look at the gas car market in 2021 car and driver lists 10 of the cheapest cars manufactured by popular oems that are all under twenty thousand dollars theoretically an electric vehicle should be able to compete with these ice cars on sticker price as evs have fewer components the main contributor to a lower price will have to be related to an advancement in the battery pack which is the most expensive component currently of an electric vehicle of course the total cost of ownership of an ev is already better and highly competitive with many gas cars investment firm arc invests research shows that tesla's model 3's cost per mile which includes the purchase price fuel maintenance operating cost and residual value is already lower than that of a toyota camry despite the higher sticker price but the sticker price does play a large role in consumer decision making because few people calculate and compare the cost per mile and the total cost of ownership over the lifespan of the car when they go to purchase a new vehicle but it is possible that tesla could achieve a much lower price research by bloomberg industry week in 2017 estimated that electric cars would cost less than gas cars by 2025 and as we approach that year it's becoming evident that this will likely occur even based on pre-pandemic price levels during tesla's battery day event elon musk unveiled that tesla was working on a 25 000 robo taxi which is likely being developed in the united states however it's possible that robo taxis may not be sold to consumers since the ability for full self-driving to make money in a low-cost uber-like fashion will make it likely that tesla may keep the robo taxis for their own fleet that said a robo taxi has the advantage of relying more heavily on software eliminating the need for even more vehicle components such as the steering wheel mirrors and anything else that isn't required if there's no driver and never needs to be but this type of vehicle may not be something that regular consumers would purchase the cheapest option will likely come out of tesla's china design center first especially given that costs for tesla's made in china model 3 and y are lower than their u.s counterparts due to lower labor costs and other favorable economics in china according to tesla china president tom zhu he reiterated earlier this year that tesla is working on a compact car at their first design center outside of the united states this vehicle will be sold and exported globally according to what he says the target price for this vehicle is 25 000 but tesla continues to make rapid advances in their manufacturing technology as a matter of fact tesla's us-made model y is reportedly cheaper to produce than the us-made model 3 thanks to better production capabilities and single-piece castings given china's brisk speed as we witness in the 10-month bring up of the shanghai gigafactory it's possible that a china-made model could beat a us-made car on price and cost which could allow tesla to breach the 20-thousand dollar level the biggest cost in an ev is the battery which makes up a sizeable chunk of the vehicle cutting the costs here will be essential to hitting 19 999 dollars and to compete with the most affordable gas cars let's take a step back and look at moore's law named for gordon moore the co-founder of intel which originated from the semiconductor industry where it was observed that the density of transistors in a circuit doubled about every two years scientists and engineers were able to pack even more transistors into the same space which had many benefits including reducing the cost of the product and this has been true for the last 60 years however investment firm arc invest has pointed out that moore's law is actually incorrect one simple example is that if we did nothing for two years didn't advance the technology at all then the number of transistors wouldn't increase and the cost would not come down each year people keep inventing new ways to make circuits smaller and more efficient but if that stops and two years goes by then moore's law can't possibly hold forever even though it's still going until today and people have been calling for it to end for years now but arkhanvest uses wright's law which separates this phenomenon away from the time aspect and relates it to production instead arc refers back to theodore wright who determined that for every cumulative doubling in the number of airplanes produced manufacturers realized a consistent cost decline in percentage terms the cost to produce the 2 000 plane was 15 percent less than it took to produce the 1 000 plane and the cost to produce the 4 000th plane was 15 less than to produce the 2000th plane and so after tesla's battery day event arc posed the question does wright's law still apply to tesla because they're planning for big battery and manufacturing breakthroughs and in this article arc invest concludes that wright's loss still holds and that's great but i think this is sort of the wrong question i know wright's law holds but i want to know when we'll start seeing these highly affordable cars see moore's law is more popular and prevalent because it relates more to the end consumer every two years the price comes down that means there's always something better and faster coming out and last year's model gets a price haircut consumers have no idea nor do they care what the production volume was for a certain product they just want to see prices come down over time or performance and efficiency go up for the same price and so tesla released this graph on battery day that showed the trajectory for declining battery costs in dollars per kilowatt hour for the industry with a forecast until 2025. the trajectory seems to be leveling out or it's not as steep as it was 10 years ago and then they showed their own forecast and how they plan to break away from everyone else by 2025 it looks like their planned cell costs will be half of what the industry forecast is and if we think back to wright's law for every cumulative doubling the price goes down well tesla is simply trying to speed this up they have a new cell in factory design new anode and cathode materials and they're adopting cell to vehicle integration where the cells themselves are part of the structure of the car tesla is looking to achieve a 56 reduction in dollars per kilowatt hour thanks to these changes in the 4680 battery cell they've started to manufacture their own batteries and they plan for a 100 gigawatt hours in 2022. keep in mind that at the beginning of last year the entire company only had about 35 gigawatt hours jointly with panasonic and so this is about triple of the company's production and then they plan to double the battery output about every year and a half to get to three terawatt hours by 2030 and before i forget stop using yahoo finance stop using google finance and check out our website the market is open.com where we have instant stock quotes and financial data going back 10 years and it's all freely available in china tesla is already using lithium iron phosphate batteries in the model 3. while these batteries have a lower energy density meaning they have less range and lower watt hours per kilogram tesla vehicles have gotten so efficient that these batteries now make a lot of sense given their low price point they don't contain any cobalt which is the expensive material found in other types of batteries and iron is a very abundant and cheap material compared to nickel based batteries what's most amazing is that tesla's new 4680 batteries can use various types of battery cathode materials meaning they can support the lithium iron phosphate chemistry tesla has been sourcing its batteries from external suppliers but when they combine the lfp batteries with the 4680 innovations including cell to vehicle integration and their upgraded processes and materials the results could be mind blowing especially for the lower end most affordable vehicles tesla will be pumping out batteries but given the 54 range increase that tesla will achieve with these new cells each vehicle won't need many 4680s if tesla keeps the range the same which is very acceptable for low priced cars they can pull out 35 more cells and still get the car to travel the same distance on a single charge so the key to reducing battery costs is to drastically boost production of tesla's new battery cells which are currently not being developed or used at all in china when they begin producing these cells this will allow for more vehicles to be produced and sold which will play right into the hands of wright's law reducing costs across the entire vehicle as overall production is able to increase and tesla isn't just focusing on batteries they keep pulling components out of the vehicle and making the existing components more efficient and cheaper let's look at tesla's highest end vehicle the model as plaid where we may see tesla bring some of the advances they've made here to their other more affordable vehicles over time or once they hit a higher scale for example the model s plaid is the first tesla to have no stocks on the steering wheel this saves components the time it takes to install them the robots and people they need to do the work and the central screen will now take care of that completely digitally there's no more gear shifter the car guesses which direction you want to go accurately learns over time and you can override using the screen which costs nothing to add onto a bitmap display for new model 3 and y vehicles rolling off the line tesla also recently removed the radar replaced it with better software again software is much cheaper than physical hardware components and it's completely scalable to all of tesla's vehicles i think tesla is removing unneeded components faster than expected they made this clear when they removed the radar that it was done earlier than expected and thus when all of this comes together the price of vehicles especially a new compact car coming out of china with all this in mind giving tesla a fresh slate and prices will drop much faster than anyone expects and then because of tesla's manufacturing speed increases with the gigapress these lower cost vehicles will be true mass-market cars volumes in these vehicles should greatly exceed that of the model 3 and y because of their lower price point meaning that tesla will have much higher volume production further decreasing the costs when teslas reach much higher economies of scale such as where honda and volkswagen and toyota are they're able to take advantage of that they can even reduce component costs from suppliers if they're being used by millions more vehicles couple all of these improvements with a much smaller car that doesn't even need a large battery given huge weight reductions including the battery itself the standard range model 3 uses a 50 kilowatt hour battery pack it's possible tesla's smaller compact vehicle is significantly more efficient maybe it only needs a 40 kilowatt hour battery pack for a low but acceptable range given the 20 000 price point tesla can also dial back the 0-60 acceleration in exchange for more range given that the vehicle is inherently lighter volkswagen does this for example by upping the acceleration for their porsche take-in but giving it a terrible 200-mile range worse than the lowest range model 3. while at the low end volkswagen sacrifices performance in exchange for range with their id series vehicles while tesla's batteries are more advanced a 19 tesla model will still have good performance and range given their efficient and powerful motors tesla is producing power trains in bulk already but costs will come down further as per wright's law as tesla can aim to sell millions more sub twenty thousand dollar compact vehicles than even model three or y truly hitting all market segments at this low price gas cars won't stand a chance so do you think tesla will be able to not only hit the 25 000 price range in the united states but perhaps break below 20 thousand dollars with the help of the china gigafactory and when do you think an affordable vehicle like this will hit the road please hit the like button and subscribe we'd very much appreciate that and a huge shout out to all of our patrons that helped to support our channel your support helps us to continue to make great content thank you guys so much for watching

Channel: TMIO Tesla

Views: 217,415

Keywords: tesla, elon musk, Tesla $20000 compact car coming soon, new 2021 cheapest tesla model 2, $25000 tesla is a gamechanger, new tesla model 2 is game over for gas, game over $20000 tesla compact car, china compact car, tesla 4680 will enable affordable tesla, tesla $20000 compact car new batteries

Id: 0vEIMOLvzio

Length: 14min 53sec (893 seconds)

Published: Sun Jun 27 2021