Tesla Motors Inc’s next strategic turn could cost the electric car maker “tens of billions” of dollars over the long term, but will likely require only a “modest” increase in capital, chief executive Elon Musk said on Tuesday.
Musk’s comments during a media open house at Tesla’s sprawling, battery “gigafactory” outside Reno, Nevada, come at a time when the automaker is losing money and dealing with investigations into a crash that killed a driver using its Autopilot driving-assist software.
Musk seemed unwilling to let such speed bumps slow him down.
Photo: Reuters
Last week he unveiled an ambitious plan to expand the company into electric trucks and buses, as well as car sharing. His broad new strategy for Tesla also calls for combining with solar energy company SolarCity Corp.
Musk on Tuesday said because the plan will roll out over a number of years, it could be mostly funded from sales of vehicles, particularly the Model 3 sedan due to launch next year.
While some analysts have questioned how profitable the Model 3 will be, Musk said he expects the car to generate US$20 billion in revenue per year and US$5 billion in gross profit once it is up to full production of about 500,000 vehicles a year.
“It’s possible to fund quite a bit with that,” Musk said, adding that not all the proposed new vehicles will happen simultaneously.
Musk said Tesla has finished engineering the Model 3 and he is confident it can launch production next summer.
Musk also discussed the US$5 billion battery plant being developed with Japan’s Panasonic Corp.
Musk said the factory could ultimately support 1.5 million electric vehicles a year and he was confident the partners could eventually lower battery costs to US$100 per kilowatt-hour by 2020.
Rival General Motors Co has said it expects to achieve battery costs of US$145 per kilowatt hour with the LG Chem Ltd batteries used in its US$35,000 Chevrolet Bolt. That vehicle is due to launch later this year, nearly a year ahead of Tesla’s similarly priced Model 3.
Tesla is also gearing up for a substantial overhaul of its vehicle assembly plant in Fremont, California. Model S sedans and Model X sport utilities are currently built using two separate lines of welding robots.
Tesla said earlier this month that production, which also fell short of targets in the second quarter, is now averaging about 2,000 vehicles a week.
That is still about half the rate of a conventional auto assembly plant.
A new paint shop installed in the plant will be capable of processing 10,000 cars a week. Assembly of the powertrains for Tesla cars will be moved to the Reno gigafactory, Tesla officials said.
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