Elon Musk has never been shy about sharing his thoughts regarding Tesla to the general public. Recently, he revealed what the company could achieve in 3 years. According to CNBC, Musk believes that it could build a low-cost version of a car in the said period.
While Musk is optimistic about the idea, he admits it is “really tough,” citing the auto sector’s economics and competition as reasons. Amid the controversy surrounding him after suggesting that he would take the company private, the CEO talked about the auto industry, particularly electric cars.
According to Musk, Tesla is comparatively smaller; hence, it is having a hard time competing against major car manufacturers such as Ford and General Motors. He even describes these car makers’ scale akin to “insanely competitive industry.”
Musk further stated, in an interview, that his company is heavily focused on building cars that are much more affordable. Apparently, this goal is what makes their situation a bit hard. For Tesla to continue to build cars that are affordable, would need a scale that is high in volume and economies. When asked if the company could eventually make a cheaper car with higher quality, Musk did not hesitate to respond enthusiastically.
He said: “I think in order for us to get up to…a 25,000 car, that’s something we can do.” He added that if and only if they work hard, it would be possible to achieve such feat in about 3 years. Still, for him, everything totally depends on both time and scale. Musk compared car making to the early years of the smartphones, which, at first, were quite bulky and lacked the much-needed functionality.
Musk stated that with the company’s successive design iteration, there is a higher chance of adding more things. More importantly, it is easier to find ways to better produce vehicles. As a result, it becomes a lot better and cheaper.
He also pondered upon the so-called “natural progression” of any type of technology. Because of it, it would require several versions and massive volume to make a single car more affordable.
Toyota Prius is without a doubt one of the top trade-ins for a Tesla Model 3 on the market. This is, in fact, confirmed by Must himself during an August earnings call. The said car model, which starts at $23,475, is about half the cost of the $49,000 Model 3 starting price.
On the other hand, Musk is proud to say that his company never shells out virtually on anything that involves advertisements and/or endorsements. They simply rely on word of mouth.
“Where I put all the money into and all the attention into is trying to make the product as compelling as possible,” Musk said. For him, the best possible way to sell a product is to obtain something that consumers would not only love but will also talk about.
“If you love it, you’re going to talk and that generates word of mouth,” he iterated. True to his words, this has been Tesla’s business model since time immemorial. It has heavily relied on word of mouth. While there are no discounts, the company does not pay a single cent on advertising. He even admits paying full price on his own Tesla cars.
Although the idea of manufacturing a vehicle that is a lot cheaper is interesting and is indeed part of Tesla’s plans, Musk made it clear that it is currently not a priority. For now, they want to concentrate on delivering the Model Y, Tesla Pickup, Tesla Semi, and the next-generation Roadster, all of which are expected to arrive in the next few years.