Tesla's new model, which will be built on a 3rd generation platform, paves the way to $400 billion in auto revenues in 2030, says New Street Research. The firm believes the new model is critical to Tesla's continued success.
In anticipation of Tesla Investor Day, managing partner at New Street Research Pierre Ferragu shared the firm's expectations for a major announcement to be made at the event. He said Tesla's new model is critical to the company's continued success and offered an overview of how they see it and its impact on the development of the manufacturer.
New Street Research expects the new model to be 15% shorter, 30% lighter, and have a 25% smaller battery than the current Model 3. The firm looked at comparisons between compact ICE cars and midsize ICE sedans and extrapolated the comparison between the Model 3 and midsize ICE sedans to arrive at that conclusion.
We expect Model 2 15% shorter, 30% lighter and 25% smaller battery than Model 3. We looked at how ICE compacts compare to mid-size ICE sedans and extrapolated the comparison between Model 3 and ICE mid-size sedans to reach this conclusion. pic.twitter.com/csDfINpBik— Pierre Ferragu (@p_ferragu) February 27, 2023
The firm expects the new model to be 37% cheaper to produce than Model 3. Half of that difference will be directly attributable to the car's smaller size, while the other half will be mainly due to innovations in design, architecture, and manufacturing. The analyst writes that this translates into a $21,600 COGS (cost of goods sold) at scale, including the full FSD hardware installed in the vehicle.
Lower cost, FSD support, and superior range and performance will give Tesla's new model an edge over Toyota Corolla. It will be like the advantage Model 3 has over Honda Accord now. It also means a gross margin of over 20% compared to the mid-single digits for Corolla.
Subsequently, Tesla will be able to maintain gross margins of 30% for cars, with both the new model and FSD increasing in the mix. New Street Research expects the new model to cost $25,000, as announced at Battery Day 2020. This means that the new model will cover 80% of the automotive market and allow Tesla to exceed 12 million vehicles and $400B in auto revenues in 2030.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.