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Tesla's 10x Production Speed
Tesla gave guidance to produce 1.8 million vehicles in 2023, which I consider to be sandbagging - meaning Tesla is basically already at that run rate right now. Elon Musk said he wanted to account for all the things that seem to go wrong each year. But, I think Tesla will get close to 2 million vehicles or more delivered in 2023. Tesla has an eventual goal to get to 20 million vehicles per year.
Tesla has started lowering the price of all its vehicles, especially the Model Y long range, which is now having its wait times increase. Ford had to lower the price of the Mustang Mach-E between $400 and $5,700. If Ford didn't do this, it wouldn't be able to compete with Tesla. Ford plans to get this to 130,000 units in 2023.
The Tesla Model Y will get to over 1 million units this year and the Ford Mustang Mach-E was released about 6 months after the Model Y. At around the same time they launched, the Model Y is about 10x the units produced as Ford.
The Ford Mustang Mach-E is not a profit center for Ford. The decision to lower the price of this vehicle makes no sense. The one thing that auto companies struggle with is margins. It's very hard to generate margins when building physical items like cars.
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Will Anyone in the U.S. Catch Up?
For has margins less than 10%. Tesla has about 24%. Tesla is at 24% after lowering prices. Where is the discount coming out of for Ford? Is it going to lower its margins even further below 10%? It is a losing battle for Ford with the Mustang Mach-E.
If this is a publicity stunt for Ford to show that they are progressing in EVs, it's not working. There has been years of neglect and mis-allocated resources for Ford. They and GM are so far behind, that this is just a "Hail Mary" attempt.
Legacy automakers, particularly in the U.S. are in a losing position when it comes to EVs. The only thing to do in response is completely pivot, or say things that Toyota is currently saying, and they are saying that hybrids are still very viable. Hybrids are still mostly gas powered cars, and Toyota is also so far behind that they cannot feasibly catch Tesla. So they must change their story.
With other automakers lagging behind Tesla in EVs and EV adoption continuing to grow as much as it is, it's not looking good for legacy auto. They are going to have to come up with some serious change in order to compete in the future as their gas powered cars dry up due to the economics of an EV.
In Related News: Tesla Autopilot ranked 7th by Consumer Reports
Tesla Production Ramps 10X Faster Than Rival $TSLA @iamtomnash Full discussion https://t.co/7XHFizDbyB pic.twitter.com/2LOyWxmevP— Farzad Mesbahi (@farzyness) February 2, 2023
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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.
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