Tesla Engineers Reveal Plans to Cut Assembly Costs in Half for Future Vehicles

Tesla is looking to drastically reduce assembly costs for its next-generation vehicles, according to engineers who spoke at the company’s recent investor meeting. Lars Moravy, Tesla’s Chief Engineer, said the company expects to build its upcoming cars for half the cost of the current Model 3 or Model Y. He described a production process that involves snapping together subassemblies to reduce complexity and time in production. The process is called “unboxed” and is expected to be used in future generations of Tesla cars.

Tesla’s CFO, Zachary Kirkhorn, emphasized the company’s dedication to cutting production costs, estimating that Tesla must invest six times more than it has to date to hit its long-term target of increasing output to 20 million vehicles annually by 2030. Musk announced that the next investment step will be a new Tesla factory in northern Mexico, making it the company’s first plant outside the United States, Germany, and China.

Despite the engineers’ discussions on cost-cutting measures and Tesla’s global ambitions, CEO Elon Musk did not reveal any specific details about when the company’s much-awaited affordable electric vehicle would debut. The presentation featured an array of senior engineers, including the new global production chief, Tom Zhu, highlighting Tesla’s attempt to show the depth of its top bench beyond Musk, the face of the company.

While there were no details on when next-generation cars would be launched and what would be offered, executives said Tesla’s next-generation platform would include more than one vehicle built in standardized factories. Musk said that the key to driving Tesla’s sales volume would be bringing prices down for consumers, adding that Tesla’s discounts offered this year had stoked demand.

Capturing the mass market is critical to Tesla’s annual production goal, which is more than the combined production of the two largest volume vehicle makers, Germany’s Volkswagen and Japan’s Toyota. If Tesla succeeds, it would represent a sales volume of about a quarter of 2022’s total global car sales.