How Tesla Will Make its $25K Car

Four Ways Tesla Will Make Future EV's Cheaper

Tesla’s current cheapest vehicle, the Model 3, starts at a fairly lofty price of $38K. It would not seem that Tesla has the ability to launch a car that would substantially undercut this price…yet that is precisely what Tesla says they are going to do. Details about this more affordable $25K car are virtually non-existent, but if we watch current trends and examine prior announcements by Tesla and Elon Musk, we can piece together how they intend to make good on their promise of a truly affordable electric car.

Smaller Size

When describing this new vehicle, they have used the “compact” classification. In auto parlance, this means that the new vehicle will come in a bit smaller than the Model 3, filling a gap in the Tesla product line. A smaller-sized vehicle means less overall material costs and should bring about a small savings in that regard. Nonetheless, smaller size alone cannot account for the massive price reduction required to make $25K possible.

New Batteries Lead the Way

Tesla’s latest battery technology will surely be incorporated into this cheaper vehicle. These new battery cells use “dry electrode” technology that eliminates the multiple baths, chemicals, and reduces the factory footprint and the capital investment required for manufacturing traditional “wet” batteries.

Furthermore, the battery cells are fitted directly into the vehicle. There is no battery pack or modules….the car itself becomes the battery pack, thus solving the “box within a box problem,” saving space, weight, and reducing cost. Indeed, Tesla claims that these innovations, when combined, will cut the cost of vehicle batteries by as much as 50%. Even so, this will also likely not be enough to make a $25K car possible. So Tesla needs to revolutionize car manufacturing as well.

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Revolutionary Wire Harness

One of the most cost-intensive stages of auto manufacturing is the “wire harness.” Modern cars have miles of wiring that need to be spooled, twisted, threaded, and connected throughout the vehicle. Machines are not yet deft enough to manipulate wires in this manner, leaving this task to human beings that require a salary, dental, and sick leave.

Tesla is taking on this challenge in two ways. First, they are working to reduce the amount of wiring in their vehicles through clever design tricks. From the Model S/X to the Model 3/Y, Tesla cut the amount of wiring required in half, from 3 km to 1.5 km respectively. Tesla has indicated an interest in getting this down to just 100 meters in future vehicles.

Second, Tesla has patented rigid cables that make it possible for machines to automate at least part of this wiring process. Taken together, one of the most labor intensive aspects of auto manufacturing could be greatly alleviated, helping bring vehicle costs lower.

To Paint or Not to Paint

Vehicles are painted for both aesthetic reasons and to prevent rust from eating away at the steel construction. The process of painting vehicles, however, is capital intensive, requires large baths of chemicals, room-sized baking machines, and robotic painting arms. Indeed, this process takes up significant factory floor-space, much akin to the traditional way of making “wet” batteries.

The upcoming Tesla Cybertruck bypasses the need for paint by using stainless steel construction that doesn’t rust. In doing so, it also greatly simplifies the manufacturing process. Color options for the Cybertruck can be applied after the vehicle is produced as an additional add on if the customer desires it. I suspect that Tesla may take the similar approach with a 25K car, eliminating an expensive and unnecessary process in auto manufacturing, and up-selling on the aesthetic appeal.

The Middle Way

A $25K Tesla could be a game changer for both the company and humanity as a whole. Sustainable transportation shatters the demonstrably false notion that we must choose between the economy and the environment. Tesla shows us the middle way, a market based solution to control environmental damage that neither requires the heavy hand of government intervention nor accepts our inevitable fate to climate change.


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