Currently reading: Tesla aims to build 500,000 cars a year
New report says electric car maker Tesla's rise in the EV market shows no sign of stopping
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2 mins read
31 October 2014

Tesla could be building 500,000 EVs a year, according to a report produced by automotive analysts at International Strategy and Investment.

ISI has told investors that Tesla has a major advantage over the competition in that it will not face significant rising costs as global CO2 emissions regulations become ever more onerous. The business case for a premium electric car also seems to be compelling, according to ISI.

While Land Rover and Porsche are realising profit margins of 15-18 per cent – the highest in the mainstream car industry – Tesla could be in line for margins of 25 per cent, rising to a possible 30 per cent by 2020. 

ISI has told investors that it believes Tesla to have a “tangible lead” in both product and technology and that battery electric vehicles (BEVs) are likely to be the “optimum solution as original equipment manufacturers pursue tailpipe emission-free cars” rather than cars with hydrogen fuel cells.

ISI said: “[Tesla] has a market-leading product for which there is no obvious competition [and] has already created substantial brand equity through product and innovation. Global legislation, namely emissions regulations, is a tailwind [for Tesla] yet a headwind for the [premium] competition.”

Tesla’s estimations suggest that the cost of batteries should fall by about 30 per cent, with ISI estimating a 13 per cent drop in the factory cost of the Model S by 2020. Mainstream car makers, by contrast, will be faced with rising costs as they switch to hybrid transmissions to meet CO2 regulations. 

Tesla is also poised for greater success in China, ISI has asserted, not only because premium car sales in the country are booming but also because the Chinese authorities are pushing for a much greater uptake of BEVs. 

Estimates quoted by ISI suggest that China wants as many as five million BEVs on its roads by 2020, along with some 4.5m charging points. 

On the open market, ISI said Tesla is attracting buyers from Mercedes, Lexus and BMW as well as pulling in significant numbers of Toyota Prius customers looking for a premium upgrade. 

The nature of Tesla’s increasing competitiveness in the marketplace became clear last week when Daimler sold its four per cent stake in Tesla, raising £487m. Analysts suggest that the move shows how Tesla has now become a serious rival for premium luxury car makers, rather than a technical partner.

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Einarbb 31 October 2014

Let's wish Tesla all success . . .

. . . however, the positive environmental impact of Tesla Motors is probably still quite small. The real impact and also the real challenge, is in a future equivalent of Model T. A cheap vehicle produced annually in numbers around a million or more yearly. If Tesla can do that - Musk could become the Henry Ford of the future. But if Tesla can't move below the market for the rich. Then it's overall positive impact shall remain small.
fadyady 31 October 2014

When?

Tesla could be building 500,000 EVs a year! That to me is an incomplete sentence. When? In 2015? In 2020? Or 2030?
From roughly 30,000 to half a million is a gigantic rise. The demand for EVs will increase and Tesla is set to gain from it.
Especially if China takes to EVs, then Tesla would really need that mega battery factory they're building with Panasonic.
Tesla is already struggling to meet the current demand of their one and only EV saloon - on sale only in Europe and US.
It is easy to get carried away in praise of Tesla. Its achievements so far have dazzled even people like myself who only have a distant interest in EVs as an alternative powertrain for the future.
I can't think of any other car maker that managed to shake the whole motoring establishment with one single product.
Tesla Model X is set for release next year. Given our insatiable appetite for SUVs and that car's incredible ability, I don't see why Tesla won't have another winner in its deck?
However it will be the smaller saloon and its likely variants that could drive Tesla to an imminent EV world domination in terms of numbers that Mr Holloway mentions in his article.
Half a million cars is a relatively huge number. Tesla doesn't currently have the capacity to produce that many batteries. Let alone cars. By 2025, may be.
artill 31 October 2014

What proportion of the cost

What proportion of the cost of a Tesla is its Battery and Motor? How does this compare to say an S Class engine and fuel tank? I am sure its massively more, but the cost can be hidden in a very expensive car. Drop the price to that of a C Class, and its still affordable to make with an petrol or diesel motor, but without reducing the size of the Battery how can Tesla possibly compete? .........And if you reduce the battery pack you get back to the silly small range of the Leaf, i3 etc......We in the UK dont have enough off road parking to charge a large number of EVs, nor the capacity to produce the electricity. EVs will remain the exception, not the norm for a long time to come.

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