Tesla to produce $25K car as early as 2022 | Hacker News Reader

Tesla to produce $25K car as early as 2022

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Not an expert, but here my 2 cents:

1) Tesla's battery day in September 2020 [0] highlighted that, among other things, battery cost and production was going to become a huge focus for Tesla in the coming years, and as a result, a $25,000 Tesla car could be feasible.

2) I don't know if production costs in China are substantially lower, but assuming a large scale of operations, they should be somewhat lower than in the US.

3) I have a lot of faith in Tesla's push to improve manufacturing by building large, unique machines that simplify dozen of individual steps performed by dozen of robots into a few steps performed by a huge machine - while saving costs and time.

4) As a result of its stock skyrocketing, Tesla secured approx. $10B in new cash. That's plenty to make large investments, and move fast.

I would bet that Tesla will manage to start delivering a $25k, 250 miles range "cheap" sedan (model 2?) by mid 2022.

[0]: https://www.cnet.com/roadshow/news/tesla-battery-day-model-s...

Telsa rarely meets tasks on time I'd realistically assume 2025

Tesla is a mixed bag. The semi and roadster are nowhere to be found and the solar roof was pushed back and back.

The Model 3 was ahead of schedule (at least in terms of release if not production volumes) and so was the Model Y.

My guess is that projects that will make or break the company live under round the clock intense supervision from Musk, and have the company's top talent and full resources assigned.

Projects simmering on the back burner more or less progress as they would at other companies.

So - is the $25k Model 2 in the critical path for Tesla? I would use that as a guide to guessing whether it'll be vaporware or rushed through with superhuman effort.

It seems that for European production of Model Y, they will start delivering these (produced at Gigafactory Berlin) earlier than the expected Q3 2021.

Also not an expert, but I wonder how they will then sell other Tesla cars for $80,000 with the same logo on it.

The S and X will still be sold because the extra 55k isn't that much for wealthy customers, and it would give the vehicle more range, acceleration, spaciousness, luxury features, access to more software, etc. Consider the S has the acceleration of a multimillion dollar ICE, but it's an upright sedan with 5 seats, which shows the power of BEVs and electric motors.

My understanding is that many loyal Tesla Model S buyers are sad because of lack of updates and new premium features, trims, etc.

I'm not an EV owner, but range and acceleration after some point don't matter much.

Zero of all the Tesla owners I know bought it for any of those features.

The primary reason I'm looking at a performance model S is for the speed, I am a simple man XD

A new 25,000$ 250 mile range EV would be extremely compelling. However, I don’t think they want to dilute their brand in US with a Subcompact car, which would make hitting those numbers extremely difficult outside of China.

> I don’t think they want to dilute their brand with a Subcompact car

The affordable EV for everyone will be the making of Tesla's brand. It will increase Tesla's footprint on earth 100 fold, and realise Musk's ambition to impact society as much as Henry Ford did 100 years earlier.

But your point about branding strategy is a different one.

It used to be the case that brands would try to isolate and hone their identities to specific niches, particularly in the luxury class. In the case of automobiles, Mercedes Benz moved on from there to become a very large car maker, whilst retaining its luxury mark. It had to, because sustaining a lead in an expensive manufacturing and design product category requires scale that is commensurate with the capital requirements of the industry.

In the case of EV, that capital requirement is huge, and Tesla already has it. But to achieve ROI on all of that capital, Tesla needs scale to monetise its technical leadership. If Tesla doesn't produce the mass market affordable EV of the future asap, one of its competitors will leapfrog it one way or another.

Traditionally the competition and thus margins on ultra cheap cars where so low they basically acted as loss leaders to get people into dealerships who could up sell used cars or make it back on repairs. Tesla’s showroom model breaks the benefits of that approach which makes competing at the very bottom of the market less appealing especially as their currently constrained by manufacturing capacity.

It’s different in China where a 250 mile 25k car would still be aspirational for many people. Though the US market might look at a 200 mile range 25k EV with a 300 mile range option at ~30k as a slightly different story with significant upsell possibilities for Tesla.

The low cost car of the 1970's was a different prospect to the low cost car of 1914.

https://corporate.ford.com/articles/history/the-model-t.html

This is really false, or was true until Toyota and Honda came in with high profit, low cost cars in the 70s/80s.

You can get a Mirage starting at $13,995, yet Toyota’s cheapest car comes in at $19,925 a 40% price bump. Companies really do avoid the segment.

They don’t sell the absolute cheapest, but they sell a lot of low cost cars. They don’t avoid the low cost segment. $20k is low cost these days, even though the absolute cheapest US car is $14k.

Toyota just discontinued its Yaris that was $17k and Honda still sells its Fit for $16k.

There’s a ton of cars to be sold at the $25k level, profitably. The upsell of new versions down the road is just gravy.

I agree IC cars can be sold for 20k profitably especially when people add options. But that’s starting at a 43% price jump from the ultra low end. However, with current battery prices a 25k EV with decent range is going to need to be cut down with near Mirage levels of options, or be closer to 30k than 25k for Tesla to profitably sell them.

Granted, Tesla could put a 150 mile battery in it but that’s also a major compromise.

The Yaris was available for roughly $14k up until a year or two ago (I only know the Canadian price, which was I think $15,900 cad). It was discontinued because it didn't sell well enough.

Similarly, Nissan had the Micra available in Canada up until a year or two ago.

US Yaris was disconnected in 2020. Even the Mirage jumps 9% this year from 14k to 15,290 in 2021 with a hefty 995$ destination charge.

Companies really have been abandoning this sediment because as I said it’s unprofitable.

You say it was discontinued because it was unprofitable. I say it was discontinued because it was unpopular. Neither of us has shown any actual proof one way or the other

Those subcompacts are still sold on outside NA so latter is plausible.

There are so many affordable EV's in Europe and China, but Tesla is just a bit more exciting with range and acceleration - not everyone needs that. It's an iPhone SE equivalent.

Would it have to dilute their brand further than the Mercedes A-Class or BMW 1 Series have diluted their respective brands?

Look for the BMW 1 or 2 series here: https://www.bmwusa.com/

They don’t sell it in the US, so my guess is they think it does. Which is why the cheapest US model I could find starts at $41,250.

Alternatively, the market for premium subcompacts is sufficiently small that it doesn't justify the cost of making them comply with market regulations?

Possibly, though they seemingly pulled the model 1 in the US due to low sales figures. It’s hard to advertise cost effectively to both the top and bottom of a market. Dealerships also have huge incentives to sell used 3 series over new 1 series. It’s a little different in Europe as the utility of tiny cars is much higher there.

I don’t see a reason why they couldn’t get a model 3 down to $25K by 2025 it might be a bit hard but if they actually start to manufacture cars like a proper car manufacturer and they won’t require so much manual labor and complex welds and improve the economy of scales on their batteries it might be quite possible to hit that target especially if you consider that the price of the self driving hardware could considerably drop too especially if they move towards custom silicon.

yank the machine learning and cameras out, single lower power motor, new cheaper lighter battery cells, leads to smaller cheaper tires wheels brakes suspension. maybe!

Would Tesla roll a new MCU for a $25K car or possibly reuse the one from the 3/Y? The CPU in the current MCU is custom, if they wanted to limit software development cost on it, using the same MCU might make sense as well as economies of scale and what not.

The cameras on a Tesla are used for Front Collision Alert, Lane Departure Warning and Lane Keep Assist as well as Sentry Mode. The backup camera is required by law in many places now. Removing those would limit the number of advanced safety features they could offer.

I wonder how much cost savings would be realized by removing the nonessential cameras? I know automotive grade parts tend to cost more but are we talking about hundreds or thousands of dollars in savings?

Removing the cameras may be a good idea, but note that their extensive fleet of camera-equipped vehicles is an important part of their potentially VERY lucrative self driving software development.

EDIT: I highly recommend watching head of AI at Tesla Andrej Karpathy's talk on their self driving architecture. "The Fleet" as a source of data is a vital functional part of their self driving software development. They may be able to calculate that including cameras and a computer on a car that will ship in high volumes would increase sales of their self driving option across all Tesla vehicles (including that low cost model) enough to justify the inclusion of those parts.

https://www.youtube.com/watch?v=hx7BXih7zx8

Cameras are pretty cheap, the custom board is probably decently expensive, but if FSD is a 10-15k upgrade then it doesn't take much to sell that portion of the hardware at a loss to make it back in software options.

The cameras and machine learning thing is a money maker for Tesla. It will allow them to gather a lot of data, I mean, which Silicon Valley company will consider having thousands of eyes on the road at all times a bad thing?

Plus, expect these cameras to be the basis of expensive options and subscriptions.

Tesla has over 2 billion miles of autopilot driving data. I am skeptical of the suggestion that more driving data will accelerate or open the door to significant progress. I could easily see more data reducing efficiency and increasing overall costs.

"which Silicon Valley company will consider having thousands of eyes on the road at all times a bad thing?"

Any company that doesn't want it or need it? I'm not sure I see the obviousness. Just because something is cool doesn't mean I want my company spending money on it. What am I missing?

You're missing a wide array of applications, from dystopic surveillance to checking the state of a place (damage, garbage).

Sounds potentially profitable to me.

Of course owners should be able to opt out of that or even be paid for opting in.

Insurance..

If Tesla can stick to that schedule, demand for their $25K EV is likely to be... ridiculously large. It would compete with many legacy mass-market vehicles. The main barrier to growth would be how fast Tesla can make the new cars. It could be a game changer.

Agreed.

I'd buy one on day 1 if it at minimum: had the range for my relatively short commute (30 miles each way), matched my current vehicle's safety tech (lane keep assist/automatic emergency breaking/traffic aware cruise control), and had a standard wiper stork on the steering wheel (so I don't get tickets for using my wipers!).

A sedan at $37K+ is a tough sell for me personally. But at $25K~? Heck yeah, if just to enjoy the software updates/fun features/mechanical simplicity of electric/etc.

>my relatively short commute (30 miles each way),

LOL, what?

If customers are willing to accept a Tesla.

Every one one my friends who bought one complains of quality issues, the cars record way too much data, the auto pilot was released before was ready and can't be trusted, and you're not supposed to repair them yourself.

I would much rather pay more a Volkswagen, or any other brand.

I just want a quality product, and that means avoiding Tesla.

The demand for a Tesla at $25K is going to be huge. Given previous manufacturing delays, I wouldn't expect them to anywhere near keep up. Therefore although they could sell at $25K, due to the insane demand they may as well sell at $30K to reduce some demand, and then bring it down to $25K over a year or 2 as they work through those willing to pay a higher price.

Tesla also said they'd sell a <= $35,000 Model 3. That lasted for only a few months in 2019 before they realized that they were selling the cars under cost... So, I'd take this with a huge grain of salt.

BTW, Nissan and GM are effectively selling the Bolt and LEAF today for around $27,000, although it's not clear if they make any money by doing so.

“Buy the rumor, buy the news.”

What does that mean?

There's a saying that goes "buy the rumor, sell the news" [1], he's making a joke about buying in both occasions because the Tesla stock has been on a huge increase that few foresaw and seems to have no end to the climb. At the same time it's worth more than all other car companies combined, and many call it a bubble.

[1] https://www.davemanuel.com/investor-dictionary/buy-the-rumor...

Some stock traders try to buy stocks based on news/rumors, other based on analyzing fundamentals about the company, others by looking at graphs and predicting patterns. They all hate each other.

Interestingly it seems like the best strategy is direct indexing - buy every stock directly (skip S&P ETFs), then spend your research time deciding what to exclude instead.

Nobody is offering this yet at scale because of transaction costs.

Why is that direct indexing and not just buying stocks? What index are you tracking?

Buying stocks implies you choose what to buy, but here you buy everything (following an index) and sometimes exclude things.

It's called "direct" indexing because you don't buy e.g. an S&P ETF. Along with letting you make some decisions, it's more tax optimal.

I'm not sure how effective that strategy is if you exclude the last 2-3 years.

2008-2018 definitely behaved differently from 2018-2020 but there were some issues with passive investing in ETFs. The best strategy was to never sell anything, but if you own an ETF and it changes the index (e.g. a company becomes too large to be small-cap) then it's going to sell it.

Thank you for my loudest laugh of today.

It's a satirical comment on Tesla's meteoric stock price growth. The traditional quote is "Buy the rumor, sell the news"[0]. But with $TSLA, there's been nearly unbounded investor optimism.

[0]: https://www.thebalance.com/what-does-buy-the-rumor-sell-the-...

It’s a joke. “Buy the rumor — sell the news” is an old saying about investing in stocks.

Tesla’s stock has been skyrocketing, so why sell at all?

This post is exactly why Tesla doesn't need to spend money on marketing.

That and their demand already pretty well exceeds supply, so there's little incentive to artificially increase demand at the moment.

I do not doubt that Tesla will be able to produce a $25,000 car for the Chinese market, but I very much doubt that that car at that price will be sold outside of China and other emerging markets.

They may see it as diluting their brand in USA and Europe, but I think more than that the margins on a car that will pass muster in the US will just be too low. Tesla was never able to make the original target price of $35,000 for the Model 3 and that is with the, ahem, streamlined interior and "aero" wheels.

With that being said, Tesla may need to try. With where their stock price is at they are going to need to keep increasing revenue YoY and the only way to do that is to expand into new markets and introduce new car models. There are only so many customers in the midsize luxury car and crossover market.

Made in China. Looks a lot like the XPeng P7 and the BYD Han. Those are a little higher in price, but Tesla always low-balls their pre-launch prices.

Tesla may end up killing the US auto industry by importing Chinese cars with the Tesla nameplate.

No way that Congress is going to allow that for a multitude of reasons.

Will these be $25K the same way they have a $35K car now?

If I recall Tesla promised a $35K car before the Model 3 came out. Right now the cheapest Tesla you can buy is $37,990, before any state fees.

$35k to $38k is pretty consistent with inflation since 2016, when the Model 3 was announced:

https://www.in2013dollars.com/us/inflation/2016?amount=35000

That's an interesting way of moving the goal posts. I would assume a forward looking statement about the cost of a vehicle would include inflation.

Also, they sold the $37.9K car from day one as well, next to the $35K car, but they never delivered a single $35K car. They cancelled every order.

Which is quite improved vs. the Model 3 they did sell for $35k for quite a while.

Sure, but they never delivered a $35K Tesla. They offered one, but no one ever got one delivered. They upsold some of the people and then cancelled the order for everyone else.

Do you have any proof of that? To my knowledge, $35k Teslas were sold to the public for a while.

Hongguang Mini EV https://www.sgmw.com.cn/E50.html (partially owned by GM[0])

On video https://www.youtube.com/watch?v=N6GjphV4DCU

$4500 USD, 120kms/74miles range

This is the future imo, not Tesla

0, https://en.wikipedia.org/wiki/SAIC-GM-Wuling

I would buy one in a heartbeat, if it were available in North America. Would be a good city car (but I'd not go on any roads with speed limits above 80km/h at most)

I disagree. Sure it doesn't cost much, but it's visually displeasing, has low range and little capacity. Also, I'm guessing the quality of the interior is somewhat reflected by the price.

> This is the future imo

Not in USA they aren't. Too small.

Is the cost to manufacture a Tesla vehicle in China lower than it would be in the U.S? I thought these are nearly fully automated facilities.

It’s a huge misunderstanding that the competitive advantage of China is cost of human resource, otherwise Tesla should build super factory in India or South Asia countries.

So what is the competitive advantage?

"There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is...The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the U.S., you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China, you could fill multiple football fields..."

- Tim Cook, Apple: https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-...

I’m not trying to be cynical but to me this is why the USA and Canada has economically sabotaged themselves. We can’t possibly catch up to the skill, tooling, and pure ability of the Asian countries making our stuff.

Tim Cook points out that many believe it’s about labor costs, and that’s largely a matter of arrogance in my opinion. Many of us don’t even realize how few of us here can actually make the stuff we design. Even if we could afford our own labor, we couldn’t find the people to pay to do it anyway. How will we compete?

I’m actually curious if anyone knows what the solution to this is. It worries me quite a bit. I don’t see a bright future for North America because we can’t manufacture so many things and I think it’s going to eventually bite us very hard.

China's automotive industry isn't exactly considered world class.

It took Japan and South Korea several decades to develop a reputation for automotive quality, and many still swear off the quality of South Korean cars in particular.

Wow. This quote has just changed my perception of “made in china” label. If this is the reality distortion field, it’s of Steve Jobs quality. Well done.

For what it's worth Apple (through Foxconn) are moving some production of iPhones to India. Samsung smartphones are all Made in Vietnam and have very good build quality.

The reason China has electronics supply chain skills is that for decades they've had massive foreign investment as companies outsource productions and do knowledge transfer through JVs (joint ventures).

For future industries this won't be the case (as its politically unpalatable and China is ageing quickly). The primacy China has in the electronics supply chain is already diminishing.

Assembly is a small part of the production process, and assembly is what is being moved away from China for now.

The best thing is that your suppliers are right there... need a box, or some sort of charger? factory's right up the road from yours.

China has some advantages(and disadvantages too) over the rest of the world in general:

- It is huge, with lots of resources inside China. China also controls Tibet, non populated and with lots of natural resources.

- Population density is enormous. Some cities in the tens of millions of citizens, lots of cities in the millions.

- Very good communications by rivers and channels and also the sea with the rest of the world.

- Environmental laws are a joke there. Rule of law does not exist like in the West. In the West caring for the environment make things more expensive. In China you just trow away waste.

I understand a lot of the appeal is being close enough to suppliers to run an almost JIT manufacturing model. If you need to bring up a new design or supplier, it's not months of waiting for parts to traverse the Pacific.

If they're going to do an "agile" design, which seems to be the Tesla model (they seem to be much less about model year iterations than some brands), that could be a big deal.

Probably decades of technical and operational manufacturing know-how that has been in decline in the US, plus killer supplier networks.

Business-friendly government and regulations, very developed logistics and infrastructure.

The way I read the article it's a car meant for the Chinese public.

It's around 14-30 man hours per vehicle these days (with Tesla probably being at the lower end), so cost of labor is hardly a significant factor.

I hope this gets more people in electric cars. If they are able to hit this price point in the US too would consider purchasing.

IIRC China has much more relaxed safety standards than the USA. That alone could explain the discounted price, and would not be predictive of what the car would cost Stateside.

Yeah well good luck mining all that lithium and cobalt...

I'm not discounting a cheaper EV, I'm just saying there are other ways to transport things than the common 4 wheeled 2 by 5 meters vehicle.

A mini train could be more relevant, and the internet allows people to completely reorganize cities as we know them.

So yeah, invest in EV all you want, but in my view, democratizing batteries is not good enough.

Two huge challenges there: making such a car, and being able proeuce and service that many cars

I wouldn't bet against it but I would expected it will be out 2 years later, 2024.

I remember when they were supposed to be producing a $35K 3 years ago.

...in China.

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