The Huge Cost Reduction at Tesla Brings a Price Reduction on its Vehicles

In recent months we have been seeing how the announcements of new batteries by Tesla focus not only on its evolution in aspects such as energy density or its useful life, but above all in reducing costs. Something that in addition to the unstoppable increase in the economy of scale will soon make the North American manufacturer apply a reduction in its prices and the start-up of units with prices around $30,000.

There are several reasons for thinking that this is very close to happening. The first is the constant drop in the cost of kWh. Currently, it is estimated that the price is around 127 dollars per kWh. Something that, in the case of the most economical version, involves a production cost for the battery, which is approximately 50 kWh (409 km of WLTP autonomy) of about $6,350.

If Tesla were to drop to $100 per kWh, down 21%, it would mean that the Standard version pack would cost Tesla $5,000. While if it were to hit $80 a kWh, down 37%, then the cost of such a pack would be only $4,000.

This situation is already beginning to be noticed discreetly in quarterly accounts that have shown a profit margin per unit sold in growth. All thanks to the economy of scale that drives the reduction of costs.

Another sign that alerts us to the downward trend in Tesla’s costs is the Model Y. It is a new proposal that is part of a more fashionable segment than ever, with a higher level of finishes and better construction. Two proposals barely separated by $4,000 compared to the “veteran” Model 3 Long Range Dual Motor. More striking is that the Standard version of the Model Y itself, which will arrive in the coming months, will be priced at $40,000, which will equal the figures of the Model 3 Standard Range Plus.

That is why at the time of the launch of the Model Y Standard, Tesla will have to move the tab not to stop sales of the Model 3. Something that inevitably leads us to a new Standard version with a price that should be around $30,000.

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