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Note that Toyota also lost money for several years on the Prius as is GM on the Volt http://www.reuters.com/article/2012/09/10/us-generalmotors-autos-volt-idUSB

Note that Toyota also lost money for several years on the Prius as is GM on the Volt http://www.reuters.com/article/2012/09/10/us-generalmotors-autos-volt-idUSBRE88904J20120910 http://www.reuters.com/article/2012/09/10/us-generalmotors-a... - there is a learning curve to play in this space. Since everyone is keeping their technology private it won't be cheaper for later entrants. There will be an experience curve for the manufacturing which will lead to it becoming increasingly productive and cheaper http://en.wikipedia.org/wiki/Experience_curve_effects#The_experience_curve http://en.wikipedia.org/wiki/Experience_curve_effects#The_ex... As a comparison Boeing is reported to have an experienced a curve of 84% (costs decreasing 16% every time production units doubled) on the 777. Tesla doesn't have the legacy manufacturing infrastructure and can use far more automated methods, especially if they manufacture a large amount of the car themselves instead of outsourcing. It will be interesting to see what Tesla's numbers turn out to be.

codex 14y ago
Tesla's gross margins are currently 8% (whereas BMW is something like 19%) and they expect it to increase to 25% in one year alone. It's already up significantly from negative territory (I shudder to think what it was on the Roadster), but they still have to make the car another 18.5% cheaper. I wonder if they're aiming to squeeze that from the battery cost, in which case it's up to Panasonic, I suppose.
- rogerbinns 14y ago
  I suspect they will find ways of assembling the car quicker. That alone will reduce the cost (share of fixed overheads per car would be down) as well as allowing negotiating bigger volume discounts on materials and components.
- ANH 14y ago
  They're about to hit a volume discount from Panasonic, according to the earnings call. There are a number of other efficiencies they've identified. On the call Elon recounts some anecdotes about parts suppliers not being prepared in 2012 for the volume of orders, inefficient tire shipments, etc.

codex 14y ago

Tesla's gross margins are currently 8% (whereas BMW is something like 19%) and they expect it to increase to 25% in one year alone. It's already up significantly from negative territory (I shudder to think what it was on the Roadster), but they still have to make the car another 18.5% cheaper. I wonder if they're aiming to squeeze that from the battery cost, in which case it's up to Panasonic, I suppose.

rogerbinns 14y ago
I suspect they will find ways of assembling the car quicker. That alone will reduce the cost (share of fixed overheads per car would be down) as well as allowing negotiating bigger volume discounts on materials and components.
ANH 14y ago
They're about to hit a volume discount from Panasonic, according to the earnings call. There are a number of other efficiencies they've identified. On the call Elon recounts some anecdotes about parts suppliers not being prepared in 2012 for the volume of orders, inefficient tire shipments, etc.