Tesla flags paradigm shift in vehicle manufacturing as it looks to halve cost of EVs

Tesla has flagged a paradigm shift in the way cars are built, saying that manufacturing improvements can lead to a 50 per cent reduction in production costs and pave the way for a “new generation” of electric vehicles, including the long hinted at “low cost” Tesla.

In a four hour presentation that began with a look at how the global economy can switch to electric from combustion engines, and save money and resources, Tesla outlined how it plans to massively scale its electric vehicle and stationary battery storage production to accelerate the world’s transition.

Tesla was coy about the timing, and design of the next generation vehicle, but it outlined how streamlining vehicle design, battery and powertrain improvements, as well as revolutionary manufacturing techniques, will deliver a paradigm shift in the way cars a made.

That, of course, has major implications for the legacy car industry, including leading car makers such as Toyota. Tesla singled out that company’s best selling car, the Corolla, to show how the Tesla Model 3 already beats it on cost per mile, and how that gap will grow as the costs of production falls.

Tesla made frequent references to its “next generation” model although it declined to give details.

But the implications are clear: With a currently cost of production per vehicle of $US39,000 a 50% reduction in cost for the next generation model would get cost per vehicle below $20,000. This would enable the production of a $25,000 model while maintaining an industry leading gross margin of 20%.

Tesla also says that its new manufacturing paradigm will result in a 40% reduction in manufacturing footprint. This is due to a range of new manufacturing techniques such as Tesla’s single-body castings which enable it to make the “body-in-white” with three huge single piece castings replacing what normally requires hundreds of individual parts to be welded together with an army of robots.

It’s estimated that the revolutionary single-body castings, which Tesla produce using the world’s largest die-cast machines, save 35% of factory space compared to traditional methods.

Vice president of vehicle engineering Lars Moravy said “The traditional way of making a vehicle is this, you stamp it, you do build a body-in-white, you paint it and you do final assembly.”

“And what’s interesting is these shops are dictated by the the organisational structures that exist and they’re dictated by the boundaries that exist in the factories that are laid out.” he said.

Tesla’s organisational structure is also revolutionary, with design, engineering, manufacturing and automation teams all working together. In legacy automotive companies these departments are all separated which stifles communication and slows innovation.

Just this week Toyota executives praised Tesla’s approach saying “It’s a whole different manufacturing philosophy”

Lars Moravy outlined the huge shift in thinking from traditional mass production saying “Henry Ford first invented this assembly line in 1922. It’s been 100 years and it’s really hard to make a change after 100 years. And when you watch it happen, it’s really really silly to a guy like me.” said Moravy.

During the presentation, Moravy used a fascinating animation to show how Tesla’s new vehicle assembly procedure compares with how traditional car makers have been assembling cars since the days of the Ford Model T.

Termed the “unboxed process” instead of starting with a full body-in-white and fitting thousands of parts into and around it, the new method essentially builds major sub-assemblies for the front, rear, floor (including seats) and side panels.

This process is made possible with the huge single-body castings and the 4680 structural battery packs.

The sub-assemblies are brought together and the structural battery pack including the seats is raised up from underneath into position.

This is just one of many huge technological breakthroughs that were presented during the event. All with the goal of achieving Tesla’s mission to accelerate the world’s transition to clean technology.

The presentation not only outlined Tesla’s strategy but also provided hard numbers on how the world can develop and roll out the technology to completely decarbonise our society.

As part of his opening remarks Tesla CEO Elon Musk said “What we’re trying to convey is a message of hope and optimism, and optimism that is based on actual physics and real calculations. Not wishful thinking.”

“The world can and will move to renewable energy economy and will do so in your lifetime.”