Yuma Sun

Tesla says it will cut costs of next generation cars in half


DETROIT – Tesla says it will cut the cost of its next generation of vehicles in half, largely by using innovative manufactur­ing techniques and smaller factories.

CEO Elon Musk and other executives outlined the goals during a 3 1/2-hour investor day presentati­on at Tesla’s Austin, Texas, headquarte­rs Wednesday as they presented the company’s third master plan.

The changes could bring the cost of a new generation of vehicles to around $25,000. Many investors were hoping to catch a glimpse of the next generation vehicles, but Musk said they wouldn’t be shown until a proper product unveiling.

“We’d be jumping the gun if we answer your question,” about the new vehicles, he told an analyst.

Shares of Tesla fell nearly 6% in after-hours trading during the presentati­on that ended just after 8 p.m. Eastern time.

Musk announced that Tesla plans to build a new factory in Mexico near Monterrey. Company executives said it will not take production from any other factories, where Tesla expects to expand production. They said the Mexican plant would build the next generation of vehicles, which also will be built at other factories.

It’s likely that the next generation vehicles will be smaller than the current ones to bring the prices down, but that wasn’t clear from the presentati­on. Many automakers build smaller vehicles in Mexico to save on labor costs and preserve profit margins.

CFRA Analyst Garrett Nelson attributed the drop in Tesla’s stock to the lack of details on the new vehicles as well as the company’s history of seeing its share price rise ahead of big events, only to fall when the actual news is made.

He said the company’s long-term focus may have disappoint­ed some investors, but he sees Tesla’s vision as justifying its high stock valuation versus other automakers.

“What they outlined really made the case that it deserves to trade at a big premium to the rest of the industry,” he said.

Franz Von Holzhausen, Tesla’s design chief, said the company must make another sharp reduction in costs in order to reach its ambitious electric-vehicle production target of 20 million vehicles per year by 2030. Tesla expects to manufactur­e 1.8 million this year.

 ?? ERIC GAY/AP ?? A TESLA LOGO is seen on a vehicle on display in Austin, Texas, on Feb. 22.
ERIC GAY/AP A TESLA LOGO is seen on a vehicle on display in Austin, Texas, on Feb. 22.

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