Tesla Targets “A Few Million” Annual Sales By 2025
Tesla Motors CEO Elon Musk expects his electric vehicle company to sell 500,000 units a year annually when the Model 3 compact EV starts production in 2020. That’s a three-year delay from its original timeframe.
But Musk’s far larger target is that Tesla should be selling “a few million cars a year” globally in 2025, which means the automaker will have to build several other manufacturing plants in markets where Tesla sells overseas. But Musk added that one of those additional plants would be in America, “closer to the East Coast.”
“We should get our volume as high as we can. If we don’t make a lot of electric cars, we’re not doing as much as we can. Most of the good that Tesla will accomplish will be in cutting a path through the jungle, to show what can be done with electric cars,” Musk said at the Automotive News World Congress.
Musk said he was unafraid of—and perhaps encouraged by—other automakers taking bolder steps into the EV market, including the compact Chevrolet Bolt concept, which has a projected range of 200 miles.
“It’s chicken and egg,” said Musk “If they are uncertain about high enough demand, then they don’t want to make the investment…” He added, “I don’t see [Bolt] as a competitive threat because I see that all cars will go electric.”
Given the limits of his factory-store model in handling the swaths of customers who will be shopping for his vehicles, Musk said he is looking into the possibility of partnering with a retail-dealership chain. But he added that such a venture will not happen until production exceeds demand.
“We want to focus on production growth as opposed to demand generation,” Musk said. He expects Tesla’s manufacturing rate to double by this time next year, when the Model X crossover will be well into production.
Although the Model X launch has been delayed due to development snarls with the up-swinging “falcon-wing” rear doors, Musk said first deliveries of the crossover will arrive this summer.
“It will have the [center of gravity] of a sports car and the functionality of a minivan. This car is really good. I am highly self-critical and I do not say these things lightly,” Musk stated.
Musk said the entire 2015 allocation of Model X has been spoken for, meaning that a customer placing an order today wouldn’t see their Model X until sometime in 2016.
[one_fourth]
[/one_fourth][three_fourth_last]
As far as the profitability of the automaker, although Tesla has reported gross profits when not using Generally Accepted Accounting Principles (GAAP)—a common tactic among startups. Musk said that true GAAP profits likely won’t come until the Model 3 arrives in 2020.
When asked what Wall Street would think about such a long-term proclamation, Musk countered that, “Short-term [stock price] fluctuations are not important. People who are in it just to speculate, we feel about them the way they feel about us.”
The success of the Model 3 also hinges on driving down the cost of the battery pack. Tesla’s battery “gigafactory” under construction in Nevada will produce more lithium-ion cells than the entire world’s current output. It will cost $5 billion to build, with Tesla and battery supplier Panasonic splitting most of the costs.
“We need to have a 30-percent reduction in [battery] pack costs by 2020, because the car has to cost half as much as a Model S. The car is 20-percent lighter, so that means 20-percent less pack, and the battery pack has to contribute that additional 30 [percentage] points, Musk said.
Musk jokingly admitted that such volume growth will put strain on the maintenance-and-repair side of the business, saying that, “We’re going to need more than three guys and a van.” He said Tesla would be unveiling a new service model in a few months.
Musk realizes that his cult of personality is a major reason for Tesla’s market adoration.
Bearing that in mind, Musk said, “I am committed to stay at Tesla as long as I am alive. I may not be CEO, but I will be with the company forever. I am committed to being CEO through volume production of a mass-market car.”
