On April 28th, to truly grasp Tesla's manufacturing plans, we must delve deeper into understanding, especially when listening to Elon Musk describe future visions, we should maintain a cautious stance. After all, he always enjoys discussing the future of robotic cars and the impending industry revolution from a forward-looking perspective.
However, in the past week, Tesla's quarterly profits plummeted by 55%, burning over $2 billion in cash in the first quarter alone. Against this backdrop, Tesla's recent product plans still remain uncertain. The so-called "products" in Tesla's business are essentially a rather ordinary part, where metal is refined to eventually manufacture beloved cars by enthusiasts.
Investors are increasingly skeptical about Musk's interest in developing a cheaper next-generation entry-level electric car. In recent weeks, Musk seems overly focused on the upcoming Robotaxi set to launch in August, despite Tesla yet to prove its autonomous driving capabilities against Alphabet's Waymo.
Yet, on Tuesday, Musk attempted to convey a message to investors: more affordable electric cars are on the horizon. He claimed that the product roadmap has been accelerated, with the release of new models moved up from the original plan of the latter half of 2025 to later this year.
However, these plans seem not to be the next-generation cars investors anticipated, but rather a strategy combining new and old to swiftly introduce new products amidst sluggish growth in the U.S. electric car market. This approach sounds somewhat like a Frankenstein-esque patchwork.
On Tuesday, Musk revealed to analysts, "These new vehicles, including more affordable models, will integrate the advantages of the next-generation platform and existing platform, and can even be produced on the same production line as existing models."
When referring to platforms, Musk likely meant Tesla's latest vehicle architectures, namely Model 3 and Model Y. When Bernstein analyst Toni Sacconaghi asked whether these new cars are just tweaks to existing products like Model Y or entirely new models, Musk did not provide a detailed response.
However, industry insiders speculate that any new models starting production later this year on the same production line as existing vehicles are likely just upgraded versions of Tesla's current models. After all, Tesla recently upgraded the outdated Model 3, with Model Y possibly being the next target.
In a subsequent report, Sacconaghi told investors, "Tesla's track record of expanding models on existing platforms is rare, let alone in the short term. We believe Tesla is more likely to introduce simplified versions of Model 3 and Model Y as low-cost entry-level models for sale, but we remain skeptical about how much cost Tesla can actually cut."
This strategy may disappoint new buyers who are typically drawn to fresh, flashy products. Simultaneously, it could be seen as weakening the brand value of Tesla's existing products.
For many investors, the promise of the next-generation platform—especially the $25,000 car—has become the cornerstone of Tesla's future. This is part of Musk's grand plan, aiming to increase Tesla's annual vehicle deliveries from last year's 1.81 million to 20 million by 2030, making it the world's top-selling automaker.
As early as 2020, rumors circulated about Tesla launching cheaper cars. In a March 2023 investor presentation, Musk detailed how to make this car more affordable. Tesla introduced a new assembly process, dubbed the "unboxing" process, which was said to revolutionize traditional car manufacturing methods.
Essentially, Tesla's envisioned car manufacturing method is not the traditional assembly line production where parts are added one by one to a moving chassis. Instead, Tesla aims to modularize car components more efficiently and then integrate these modules together. Lars Moravy, Tesla's VP of Engineering, revealed to investors at the time, "If we want to scale production as planned, we must thoroughly rethink the manufacturing process."
In January of this year, Musk continued to attract investor attention with this plan, stating that production of affordable cars would begin by the end of next year. He also warned that this would be a daunting task, possibly requiring sleeping at the factory, a typical signal of the importance he places on a task.
Musk stated, "Of course, my words should be taken with caution, as I am usually optimistic. But I firmly believe that once this production process starts running, it will surpass manufacturing technologies anywhere else in the world—taking car manufacturing to new heights."
However, by Tuesday, there was a twist. Moravy mentioned that some work on the next-generation platform could be retained without fully adopting an entirely new production system, even though the bold vision proclaimed last year cannot be rapidly realized for now.
He added, "The 'unboxing' manufacturing method is undoubtedly great and revolutionary, but it also comes with certain risks. However, all subsystems we have developed, whether it's power systems, drive units, battery improvements, thermal systems, seats, interior component integration, or reducing low-voltage controllers, are transferable. This is our current focus, trying to quickly apply these technologies to actual products." Despite facing setbacks in its plans, Tesla reassured investors last week that its groundbreaking "alien dreadnought" manufacturing process is still in development. While not providing a specific timeline and with the scope of the application still unclear, Tesla told investors in its earnings report: "Our manufacturing strategy designed for autonomous driving car products will continue to embrace the 'alien dreadnought' manufacturing revolutionary concept."
This commitment inevitably brings to mind scenes from a few years ago when Musk predicted significant breakthroughs in Tesla's manufacturing process to accelerate production speed and reduce costs. This is undoubtedly another significant bet on the company's fate in Tesla's brief history. However, it turned out that Musk's insistence on extreme automation had caused a series of issues. He later admitted that the increase in Model 3 production almost pushed the company to the brink of bankruptcy.
Nevertheless, the ultimate success of the Model 3 and Model Y helped Tesla become the world's most valuable automaker and established its leadership in the electric vehicle field. These achievements further demonstrate that while Musk's grand visions may not always materialize on schedule, he can inspire the team to achieve innovative solutions that ultimately bring substantial rewards, allowing Tesla to stand out in the competition.
After Musk's conference call with analysts on Tuesday, some investors seemed willing to give him more patience, even as their optimism faces new tests. Tesla's stock price rose by 14% in the past week, but the cumulative decline for the year still stands at 32% as of last Friday.
For Musk, however, the future of robotics is where he truly wants investors to focus. He stated, "If someone is skeptical about Tesla's ability to solve autonomous driving, then I don't think they should be investors in this company."
