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Can Tesla Still Grow at 50% Each Year In the Future?

Tesla has affirmed 50% growth for the foreseeable future. Many doubt this is possible. What is true?

50% Growth fo Tesla

Tesla makes premium priced vehicles, two SUV and two sedan vehicles, the Model S, Model X, Model Y, and Model 3. Tesla will need the demand to match their supply if they are going to keep growing at 50%.

Tesla could lower their prices a lot and have a large backlog of orders. What they need to do is launch a compact vehicle to hit the large market for $30,000 vehicles. Tesla is currently not selling in this market.

Tesla may need to reduce their supply and produce fewer vehicles next year than their current runate rate and produce under 2 million at a less than 50% growth. Giga Berlin and Giga Texas may need to ramp slower to handle uncertain economic situations.

Will people buy Tesla vehicles in a recession? Tesla will need to cut prices and have lower margins in a recession in order to continue to get close to 50% growth. Tesla is also going to be able to make vehicles for a much cheaper cost at its Giga Berlin and Giga Texas factories.

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Future of Growth

Nobody is talking about the improvements at the Giga Berlin and Giga Texas factory. They will be able to make the popular SUV, the Model Y, for much cheaper. Tesla learned from their Model 3 production hell launch and Giga Shanghai was able to implement practices their that were better.

Vehicles in Giga Shanghai are built at a much lower cost and are using giga castings there. This reduces the cost even more. Giga Shanghai produces about twice as many Model Y vehicles as Model 3 vehicles. Processes are also more efficient.

There is an addition of the structural battery pack - the 4680 batteries - to the vehicles made from Giga Texas. This factory will also make the Cybertruck. Giga Texas is going to make vehicles at a much cheaper cost.

There will be additional vehicles made that cost a lot less. A Giga Texas Model Y and a Fremont Model Y will cost significantly different. The 4680 batteries should save about $6,000. Front and back castings should save money. Giga Texas will produce vehicles at a 5 to 6 times speed.

Giga Texas will be even faster than Giga Shanghai with automation, robots, and simplified processes. Tesla has put a lot of effort into its automation. Increased production speed decreases cost.

Giga Texas should be able to make a Model Y for around $28,000 with the improvements its doing. At a 25% margin, Giga Texas can make a structural battery Model Y for less than the standard range Model Y in Giga Shanghai.

In summary, I think Tesla, barring an economic depression and not a recession, should continue its 50% growth - especially with tax credits and continued demand for the Model Y. For more information, see this video from Tesla Economist:

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot