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- Tesla is the global leader in electric cars, but it must diversify its product line.
- Elon Musk must make more affordable cars if he wants to be a major player like GM or Volkswagen.
- Musk plans to build a $25,000 car but it's not clear where the project is.
Elon Musk has big goals for Tesla. He wants to sell 20 million cars by 2030, which is the equivalent of Toyota and Volkswagen combined. And make the company worth trillions.
Experts say Tesla must expand its lineup to sell more affordable models if it wants to be a long-term leader in the automotive industry.
With its current four-vehicle, high-end lineup of electric cars, the company has made huge strides. With 1.3 million units sold last year, it's the world's top-selling battery-powered car (up 40% over 2021). Nearly 70% of all EVs sold in America in 2022 were made from the Model 3, Model Y and Model S.
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Industry watchers warn that the skyrocketing growth will end if it doesn't offer more mass-market, affordable options. This makes sense, considering how the largest automotive players operate; they offer a wide range of products to suit a variety of customers.
Toyota offers the $22,000 Corolla, the $100,000 Lexus LC and many other options. Volkswagen sells affordable hatchbacks as well as Porsches, Audis and Bentleys. General Motors produces Cadillacs and Chevys.
It is vulnerable to stiffening competition because of the gap at its low end. China's BYD is rapidly gaining on Tesla's No.2 spot in EV sales globally. It's not surprising, Michael Dunne of ZoZoGo, the founder of the EV consulting firm, said to Insider. This is especially considering the fact that BYD boasts a large portfolio, while Tesla is a solid luxury player.
"It's almost like asking, "Will Toyota surpass Mercedes in overall sales?" Dunne stated that Toyota offers a wide range of vehicles, ranging from $20,000 to $80,000. "The lower the price, the larger the market.
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Mercedes-Benz sells approximately 2 million cars annually. Toyota sells 10,000,000.
Insider is told that Tesla will have to offer new products, such as trucks and more affordable cars, as the EV market heats up. Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions, said that this was necessary because buyers are increasingly interested in electric vehicles. Model 3 and Model Y were Tesla's most popular models in 2017, and 2020.
He said that it would take a while before EV buyers expand sufficiently to require a variety of products. Tesla must be ready when the market is ready. He also stated that Tesla cannot be a major player and achieve its lofty goals by only producing a handful of models.
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Bernstein analysts recently stated that Tesla should prioritize developing low-cost models, particularly given recent price cuts and slowing demand.
"Given our concerns regarding Models 3 and Y's end state volume levels, which are dictated either by luxury buyers' desire to differentiate or price, we believe it is increasingly important that TSLA offers other (lower-priced) models," they stated in a January note to investors.
Tesla has been discussing plans to build a $25,000 car. However, it is not clear where the project is at present. Although the vehicle was expected to arrive in 2023, Musk stated that Tesla has too many other priorities. Musk then spoke out in November about progress on a lower-cost platform for vehicles, but did not specify what the final product would look like.
Musk's automaker has struggled to diversify its lineup, even though it invested resources in accelerating production of Model 3 and Y. Three years late, the Semi, a class-8 truck was launched in 2022. The Roadster sports car and Cybertruck pickup have been discontinued years after their announcements.
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By: tlevin@insider.com (Tim Levin)
Title: Tesla needs to start acting more like Toyota and GM if it really wants to win the electric car race
Sourced From: www.businessinsider.com/tesla-cheaper-affordable-cars-evs-stay-dominant-model-2-2023-1
Published Date: Sat, 21 Jan 2023 11:55:00 +0000
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