Electric vehicle leader Tesla could leverage its $ 1 trillion market value and world-leading margins and deliver a $ 15,000 (A $ 20,000) single electric vehicle starting in 2025, according to a new report by a respected analyst. Adam Jonas of Morgan Stanley.
The analysis, released a day after Tesla announced another big quarterly profit, notes that Tesla is already the world’s most valuable and profitable automaker, and also wants to become a “cost leader” in electric vehicles.
“We believe Tesla could bring a vehicle to market for $ 15,000 or less, probably this decade… if not before 2025,” Jonas wrote in the report. And he argues that it could do so through manufacturing innovation, such as the new giga-press, and on a large scale, producing more than a million units per factory.
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A $ 15,000 electric vehicle, even from Tesla, wouldn’t be long-range and wouldn’t be particularly fast. Savings would be achieved with a smaller battery and modest performance. But according to Jonas, it would be “safe, reliable, (most importantly) easy to manufacture and could be supplied with readily available raw materials… of safe origin.”
The implications of such a move should not be underestimated. That would be great for consumers and potentially devastating for historic automakers, simply because they couldn’t hope to match Tesla’s scale and prices in such a short period of time.
Jonas notes that Tesla is already a “tera-cap” meaning it has a market value of more than $ 1 trillion on a “fully diluted” basis, which includes stock options and the like that have not yet been converted or expired.
It is also by far the most profitable carmaker in the world in terms of margins, but its future earnings may not be from the sale of the vehicles themselves, but from all the add-ons, subscriptions, and carpools that will accompany EVs. vehicles and software, autonomous driving technologies and rapidly changing driving habits.
“We expect Tesla to invest that margin in price, capacity, and scale… which could add vice-like pressure on established automakers,” Jonas writes.
“The combination is potentially detrimental to historical players.”
Jonas notes that Tesla not only has large amounts of capital, it also has a leadership position in technology. This puts it in the first position to set technology standards and accelerate the pace of deflation and key inputs.
Meanwhile, competitors struggle to catch up. But there are so many big bets for batteries on the market that some may turn out to be obsolete in the short term, notably the fate of Betamax, VHS, Palm Pilot, and Blackberry. It is a risky business for those trying to catch up.
The last prediction is interesting. It’s been less than two months since Jonas and his team predicted a Tesla at perhaps $ 20,000 before the end of the decade.
Now the price prediction is down again and the time frame is shorter. But that’s exactly how fast the game is moving in the EV market right now.