Week 3/25 Update on Tesla:
In the realm of electric vehicles (EVs), Tesla continues to make waves, but its latest updates on Model Y production and sales in Europe paint a picture of mixed performance.
The revised Tesla Model Y is now being produced in Germany, and variants such as the long-range four-wheel-drive and rear-wheel-drive models have been introduced. Yet, overall Model Y sales have experienced significant declines in some countries like Sweden (88% drop) and Denmark (49% drop), despite gains in Norway and Spain.
One of the key challenges Tesla faces in Europe is the stringent rules on autonomous driving, a major selling point of the Model Y in the U.S. Elon Musk has highlighted these rules as a significant obstacle limiting Tesla's appeal and sales growth.
Tesla's strategy for production remains adaptive. Given the high local production costs, the company continues to manufacture some models like the Model 3 in China and import them to Europe. However, anticipation builds around the new Model Y, expected within a few months of mid-2025, which could boost European sales significantly if priced about 20% lower.
Regarding battery technology, Tesla sources LFP batteries from CATL and BYD, the world's leading producers of LFP batteries, and also runs its own program for cylindrical cells in the 4680 format. The patent describes a more scalable, lower-cost means of making LFP batteries, which could potentially lead to the production of these batteries at full scale at a lower cost than those from China.
However, concrete updates on Tesla’s plans or progress in producing these batteries themselves are yet to be confirmed. The introduction of a lower-cost Model Y likely implies efforts to integrate more cost-efficient battery technologies, as LFP batteries are widely recognized for affordability and safety advantages, especially in standard-range EV variants.
In other news, Elon Musk has been making headlines with his political stance. He wrote "From MAGA to MEGA: Make Europe Great Again!" on Twitter, seemingly aiming to export only electric cars and stationary batteries to Europe. This move could potentially reshape the EV landscape in Europe, given Tesla's significant presence in the market.
In conclusion, Tesla's Model Y sales in Europe are currently challenged by competition and regulatory barriers, with potential improvement expected from upcoming cheaper models. Tesla's direct production of affordable LFP batteries in Europe remains uncertain without official confirmation or recent detailed announcements.
Acknowledging Tesla's ongoing production of the Model Y in Germany, the company's business strategy in Europe involves manufacturing some models, like the Model 3, in Asia and importing them, while anticipating a significant boost in sales with the upcoming, more affordably priced Model Y, leveraging technology advancements in battery production.
In line with this, Tesla's efforts toward integrating cost-efficient LFP battery technologies in their products demonstrate a commitment to finance innovation in battery technology, with aspirations to potentially produce these batteries at scale in Europe.
