Tesla Could Expand Its Addressable Market 10X by Cutting Cost of An EV in Half, Says ARK Invest

Image: CarScoops

Tesla's new car platform will be more cost-effective and require half the effort to produce it, Tesla said during the Q3 Earnings Call. According to ARK Invest, Tesla can expand its targeted market tenfold with a car on this platform.

Elon Musk noted during the Q3 Earnings Call last week that Tesla will develop a vehicle that will sell for about half the price of Model 3 and Model Y. After evaluating the information received, ARK Invest concluded that with a cost of about $30,000 per car, the company will be able to increase the addressable market by up to 50% in the US.
“While vehicles at price-points above $60,000 address ~5% of the total US car market, the addressable market expands to 50% at ~$30,000.”

In addition, ARK Invest analyst Sam Korus emphasized that fears about a decrease in demand for Tesla cars are misplaced. At the moment, the supply of Tesla cars is limited, and a more affordable car will further increase demand, probably by a factor of 10, Korus suggests.
“In our view, fears of declining demand for Tesla vehicles are misplaced. If anything, Tesla is supply constrained at current price points, and a $30,000 vehicle could expand demand ten-fold. We would not be surprised if Tesla's next-generation vehicle is the cyber robotaxi.”

Tesla executives said that the transition to a new platform would take place when it becomes possible to reduce the overall cost of production, not only financial, but also effort costs. The company expects that in the time it takes to produce one Model 3, it will be able to produce two vehicles on the new platform. This, in turn, will also mean that production will use half the factory floor space of what is currently in use. The new platform will certainly be smaller than Model 3/Y, and the new generation vehicle will be produced in quantities that will surpass the production of the entire current line of Tesla vehicles combined. For its production, Tesla will tap into all the knowledge and experience gained during the design and production of Model S, X, 3, Y, Cybertruck, and Semi.

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