Tesla CEO Elon Musk’s presentation did not excite investors as he did not offer further details related to the upcoming next-generation electric car models that are supposed to drive the company’s next stage of growth.
For four hours Musk and his executives made efforts to explain the goodness of their electric cars. They made calculations and projections about the sustainable energy transition required and, yes, a big boast about the efficiency of the new ones in terms of manufacturing and engineering.
However, neither Musk nor the Tesla executives accompanying him talked about cheaper electric vehicle models that might be affordable to most. So the Tesla Investor Day 2023 ended without any information about the expected news of the day.
New Tesla plant in Mexico
Solo confirmed the construction of a new Tesla plant in Monterrey, Mexico. This was the most important announcement of the day. It has not yet been specified when Tesla plans to inaugurate the new automotive plant. But it was announced that the next generation car will be manufactured in Mexico.
Tesla’s announcement comes after a Chinese state-run newspaper this week warned Musk that things could turn sour for him in China. The threat was the Chinese government’s response to Musk’s retweet of the U.S. Department of Energy’s assessment that the covid-19 came out of a Wuhan lab.
The CEO said Tesla will manufacture its next-generation vehicle in Mexico. To that end, the company plans to hold a grand opening although it has not yet said by what date it plans to do so.
“I’d love to really show you what I mean and introduce the next-generation car, but you’ll have to trust me until a later date,” Tesla design chief Franz von Holzhausen said during the Austin, Texas-based company’s meeting.
“We will always be delivering exciting, compelling and desirable vehicles, as we always have,” the executive added.
Tesla’s stock plunges
As a result of the meeting, during Thursday’s premarket Tesla shares plunged 5.7% in New York. Although the anticipation of the event caused the company’s shares to rise by more than $300 billion in market value in two months.
Asked when the electric car maker will showcase its new prototype to observe its size, content and performance, Musk merely said that Tesla will hold a “proper product event” for it without specifying the timing.
Tesla’s vice president of vehicle engineering, Lars Moravy, promised that the company will go “as fast as we can.” And he added that he expects the prototype “to be a high-volume product.”
Key points addressed at the meeting
The highlights of Tesla’s Investor Day meeting could be summarized as follows:
- Construction of a lithium refining plant in Corpus Christi, Texas.
- According to Musk artificial intelligence stresses him out a lot so he pointed out that a regulatory authority needs to be created to ensure that this “rather dangerous technology” does not infringe on the public interest.
- Tesla reached a total of 4 million cars manufactured recently. Getting to the first million took 12 years, but in just 36 months it manufactured the other 3 million. With a substantial and progressive decrease in manufacturing time.
- The automaker will replace rare earths with a magnet motor in Tesla’s next powertrain unit, propulsion system engineering vice president Colin Campbell revealed.
Following this latest announcement, shares of mining companies that mine rare earths immediately fell. Tesla recently delivered Semi trucks to its first customer and this year plans to begin production of the Cybertruck.
“Toward a sustainable energy economy.”
At the opening of the event, 51-year-old Musk laid out a series of arguments about how it will be possible to replace fossil fuels in the future. From powering a grid with wind and solar energy to using heat pumps.
He noted that Tesla will be able to manufacture these heat pumps for homes at any time. The company also plans to offer home energy charging in Texas overnight for as little as $30 per month.
He predicted that “the Earth will move toward a sustainable energy economy. And it will happen in your lifetime,” he added.
To give an image of unity around his leadership at Tesla, Elon Musk appeared accompanied by the company’s executives. In this way, he responded to the criticism that arose after the controversial acquisition of Twitter for 44 billion dollars.
A total of 16 Tesla executives accompanied Musk on stage, after the long presentation made during the meeting. Several of them had not appeared in public with him before at previous events.
Focus on cost reduction
Invited investors listened to speeches by Tom Zhu, who oversaw Tesla’s Shanghai factory. The plant is now considered the most productive in the world.
Also speaking was Rebecca Tinucci, Director of Global Charging Infrastructure. She presented the “Magic Dock” function, which allows drivers of electric vehicles of different brands to use Tesla stations.
The presentations placed a strong emphasis on the company’s cost reductions this year. Likewise, Tesla’s efforts to reduce its carbon footprint by more than 40% at future sites where the company manufactures its cars.
For his part, Zach Kirkhorn, the company’s chief financial officer said that Tesla’s goal is to halve the production costs of its next-generation cars.
“The emphasis on cost reduction across the company was unsurprising but encouraging,” commented executive director of insights for automotive market researcher Edmunds, Jessica Caldwell.
“But Musk and the company failed to put the icing on the cake: a real look at a lower-priced Tesla, even if only conceptually,” she noted.
Tesla’s first master plan was published by Musk in 2006. There he laid out the strategy the company would follow for building an electric sports car. He also mentioned that he would build a series of models that would progressively become cheaper and more affordable. This was the case with the Roadster, Model S and X, and the Model 3 and Y.
But for the next decade, Musk launched the “Master Plan, Part Deux” as the company absorbed SolarCity, a provider of energy services to homes, businesses and nonprofit government organizations.
Despite monumental recent losses, Tesla is still considered the premier electric car automaker. While its competitors are losing billions of dollars, Tesla has a more realistic and efficient approach.
The company is doing what every business should do, selling its products at a profit margin. That is, above the cost of production. The mistake of selling below production cost is being made by rivals like Lucid Group Inc or Rivian Automotive Inc with some of their models.
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