Video Transcript
Price remains a concern for would-be electric vehicle (EV) buyers, but if Tesla follows through on its reported plans, the EV maker can cut costs and ultimately drive down prices for consumers.
According to Reuters, Tesla is in the planning stages for production of a 25,000-euro electric vehicle at its facility in Germany. That comes out to about $27,000, much lower than the current going rates for the Tesla Model Y and Model S, not to mention most other EVs available in the U.S. And as the report points out, a major manufacturing advance may be the catalyst.
Tesla has been investing in gigacasting, which involves huge presses used in forming large underbody sections for the company’s vehicles. The technology has allowed Tesla to mold front and rear sections for its Model Y vehicles. However, the company has reportedly made a breakthrough that would allow it to press almost the entire underbody of its EVs, an innovation that could replace nearly 400 individual parts.
Tesla, earlier this year, used its annual investor day to hype new manufacturing techniques that it said would cut automotive costs in half. The company described a modular approach that will allow it to build smaller units before bringing them together for the finished product — and gigacasting is a big part of that strategy.
That technology could be used to significantly reduce the time and costs related to vehicle manufacturing, allowing Tesla to offer EVs at much lower prices and attract entirely new customer categories. That would go a long way toward helping Tesla reach its previously established objective of selling 20 million vehicles per year by 2030.
It’s unclear how soon Tesla can bring a $27,000 EV to market, but at that price, it would present a sharply discounted alternative to the current market. According to Kelley Blue Book, the average cost for EVs in July 2023 was just more than $53,000.
