{"id":35984,"date":"2024-04-26T09:17:02","date_gmt":"2024-04-26T09:17:02","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/04\/26\/teslas-plan-for-affordable-cars-takes-page-from-detroit-rivals\/"},"modified":"2024-04-26T09:17:02","modified_gmt":"2024-04-26T09:17:02","slug":"teslas-plan-for-affordable-cars-takes-page-from-detroit-rivals","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/04\/26\/teslas-plan-for-affordable-cars-takes-page-from-detroit-rivals\/","title":{"rendered":"Tesla’s plan for affordable cars takes page from Detroit rivals"},"content":{"rendered":"
\"Tesla’s<\/div>


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Elon Musk<\/a>‘s new plan<\/a> to use current product lines as the basis for new affordable vehicles – rather than springing for all-new models – follows the playbook of Tesla’s old-school Detroit rivals<\/a>, as some Tesla<\/a> investors and analysts see it.
The shift toward incremental improvement, mirroring a common strategy of Ford and General Motors, suggests the future of car-making that Musk has promised to disrupt may still look a lot like the past.<\/p>\n
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Musk’s new strategy followed an exclusive Reuters report that Tesla had shelved plans to release a long-awaited, new model expected to cost $25,000 in late 2025. Investors had expected the affordable car, often called the Model 2, to drive the company’s growth into a mass-market automaker.<\/p>\n

Instead, Tesla said this week, it will use a current platform and production lines to produce what it called “more affordable” models by early next year. It did not provide details or pricing.<\/p>\n

The announcement sparked a double-digit stock rise and drew widespread praise from investors. Some analysts expect Tesla to offer basic versions of the Model 3 and Y, which currently start at about $39,000 and $43,000.<\/p>\n

“It is a traditional automaker strategy,” said Sandeep Rao, a senior researcher at Leverage Shares, an investment management company with assets of about $500 million, including in Tesla and other EV makers.<\/p>\n

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“You can go and buy a Volkswagen Golf Highline, which is a basic version, or you can go buy a GT, which is a pricier version and also 25% more expensive.” Tesla did not immediately respond to a request for comment.<\/p>\n

“That’s probably going to be one of the most popular cars, if they do get it launched,” said King Lip, chief strategist at BakerAvenue Wealth Management, which has a small position in Tesla.<\/p>\n

Tesla said the change would allow the company to launch low-cost vehicles swiftly but would result in smaller cost reduction than had been expected and modest volume growth.<\/p>\n

‘STRIPPED-DOWN VERSIONS’ IN A YEAR?<\/p>\n

Some analysts expect the new models to look familiar.<\/p>\n

“We see it as more likely that Tesla will attempt to launch stripped-down versions of the Model 3 and Y as lower-cost models, however we are unclear on how much cost Tesla can realistically take out,” Bernstein analyst Toni Sacconaghi said in a report.<\/p>\n

In January, Tesla said it was approaching “the natural limit of cost down of our existing vehicle lineup.”<\/p>\n

Musk’s target of a new car in a year was seen as optimistic at best by many investors and analysts, given that Musk has often failed to meet his own timing predictions: The new Cybertruck arrived four years after Musk unveiled it in 2019, and Tesla is still having trouble ramping up production.<\/p>\n

“By traditional, legacy car guy standards that Cybertruck ramp is a crawl,” said James Womack, a former research director at the Massachusetts Institute of Technology. He co-authored a 1990 book on Toyota’s lean production philosophy and methods and said it was long overdue for Tesla to act like a legacy car maker when it came to launching new vehicles on time.<\/p>\n

“Musk can tread out on the ragged edge and lean over the cliff as tech visionary,” he said. But he and others raised concerns about “execution risk” – whether Tesla could do what Musk plans, on time. “They just need to avoid too much Musk in execution” of the production plan, Womack said.<\/p>\n

While Tesla’s shift “tempers or slows down manufacturing innovation,” the change will enable Tesla to respond faster to the threat from Chinese automakers, said K. Venkatesh Prasad, a former Ford engineer, who is now chief innovation officer at the Center for Automotive Research.<\/p>\n

“There is an urgency. If you didn’t have speed, then you lose the game,” Prasad said.<\/p>\n

The change in strategy has some investors rethinking Tesla’s industry-leading valuation. Don Nesbitt, senior portfolio manager at ZCM, said that while there is the possibility of autonomous driving, eventually, right now they need to shift to making lower-cost models.<\/p>\n

Tesla used to be seen as a tech stock; “Now you’re really talking about an automaker and that’s it,” he said. <\/p>\n<\/div>\n


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Elon Musk‘s new plan to use current product lines as the basis for new affordable vehicles – rather than springing for all-new models – follows the playbook of Tesla’s old-school Detroit rivals, as some Tesla investors and analysts see it. The shift toward incremental improvement, mirroring a common strategy of Ford and General Motors, suggests […]<\/p>\n","protected":false},"author":2,"featured_media":35985,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/img.etimg.com\/photo\/88591548.cms","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[16761,39029,5529,39032,39030,1778,39031,9785,736,10453,1074,3489,21849],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/35984"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=35984"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/35984\/revisions"}],"predecessor-version":[{"id":35986,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/35984\/revisions\/35986"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/35985"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=35984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=35984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=35984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}