The new model is priced at $25,000 and adopts a more efficient and cost-effective "unpacking process".
After the release of the unexpected earnings report, Tesla revealed the timeline for the release of its next-generation vehicles.
During the earnings call on Wednesday local time, Tesla stated that its current goal is to launch the next-generation electric vehicles by the end of 2025, including a more affordable model.
Regarding this new model, Tesla has disclosed the following information:
The price is set at $25,000 to further expand the market.
It will adopt the "Unboxed Assembly Process," which, according to Tesla, will be faster, more efficient, and lower in cost.
Increasing production capacity may be challenging, and production will take place at the yet-to-be-built factories in Austin and Mexico, as well as a third factory outside of North America.
This is not a "product announcement," and Tesla remains cautious about the timeline for the end of 2025, with plans to potentially start production in mid-2025.
Tesla commented:
"This will be a challenging production ramp."
"Once in production, this vehicle will be far ahead of any manufacturing technology in the world, representing a higher level."
At the same time, Tesla also warned that sales growth in 2024 will slow down but surprisingly did not provide specific full-year delivery targets.
Wall Street predicts that Tesla will sell 2.2 million vehicles by 2024, with a year-on-year growth of approximately 20%. As a reference, Tesla has historically set the average annual growth rate of deliveries at 50%.
Morningstar Research analyst Seth Goldstein warned:
"The signals from Tesla suggest that a year-on-year growth of 50% or even 30%-40% will not happen in 2024."
The production of the new vehicle is crucial for Tesla.
Media reports indicate that even with the inclusion of the best-selling Model Y and Model 3, Tesla's product lineup is still relatively limited, and the prolonged price war has significantly eroded profits.
According to Tesla's 2023 Q4 and full-year earnings report, fourth-quarter performance fell short of expectations, with a 40% decline in profits. The automotive gross margin (excluding regulatory credits) was 17.2%, much lower than in previous years. It was the first annual profit decline in five years.
In response to the underwhelming performance, Tesla stated during the call:
"Tesla is currently in between two major growth waves."
Goldstein believes that the price reduction strategy has severely impacted Tesla's profit growth and stated that there will come a point where further price reductions are no longer possible.