Tesla (NASDAQ:TSLA) announced in its Q1 2024 report several changes to its vehicle development strategy.
Among other things, the electric carmaker said it plans to introduce new models, including more affordable options, by combining elements of its next-generation vehicle platform—aimed at reducing the cost of goods sold (COGS) from around $40,000 to $20,000 per vehicle—with aspects of its current platforms. These new models will be manufactured within existing production lines.
Tesla believes that while this approach may not achieve the maximum cost savings of an entirely new third-generation vehicle, it will improve efficiencies in capital expenditures and time to market.
Considering Tesla's tight timeframe for introducing new models and its plan to use existing manufacturing lines, Goldman Sachs analysts believe the new lower-cost models will likely incorporate design elements from the Model 3 and/or Model Y.
At Tesla's annual shareholder meeting on June 13, a slide showed current and future products, including three vehicles covered by sheets. However, those cars still gave an idea of a body shape, which analysts believe hinted at a smaller version of the Model 3, a van or larger version of the Model Y, and a robotaxi.
If Tesla can achieve roughly a quarter to a third of its original cost reduction target, it would result in an estimated $5,000 to $7,500 reduction in cost per vehicle when scaled to higher production volumes, Goldman continued.
“Tesla Model 3 and Model Y are currently offered starting at ~$39k and ~$45k respectively in the US, and for about $32K USD and $34 USD respectively in China,” analysts noted. “If Tesla were able to lower cost by a net of $5-$7.5K, it would imply a Model 3 for sub $35K in the US and sub $30K in China, and a Model Y that may start in the US for sub $40K.”