I don't get the obsession some have with the $25k car. If Tesla is already selling everything they can make at maximum production capacity, why should they produce lower margin variants rather than the higher margin ones? Either case advances the mission about the same. Isn't this the *investor's* thread?
If there comes a time when they have more capacity, I'd like to see the CT, semi, and even roadster. If demand for those and existing model variations can saturate Tesla's production capacity into 2024, I'm all for that. In the meantime, manufacturing at capacity with fewer models is a great thing.
As an investor I could not agree more. Demand for Model 3 and especially Model Y is exceedingly high, I see no reason why they could not sell 4 million per year between them. That is enough to keep the current factories at full stretch into 2024. There are still several demand levers waiting to be pulled if demand softens. It might even be possible to reach Toyota/VW levels of production with just those two models.
Massive production volumes on only a few models have several advantages:
1. economies of scale - each doubling of production rate reduces costs by a significant amount (often about 15%) [1]
2. the learning curve (wrights law) - doubling of accumulative production reduces cost by a significant amount (again often 15%) [1]
3. Marketing can be concentrated on only those few models.
4. Multiple factories producing them mean that logistics and tarrif costs can be minimised.
5. It is easy to cost effectively maintain multiple parts suppliers for every part.
6. the curse of the parts bin is lifted - whether to a common part between models or to use more efficient model specific parts can be made on a engineering basis.
7. ramping an existing model at a new factory, or adding a line, is much easier than introducing a completely new model.
Given those advantages we as investors should be very happy that Tesla are concentrating on only a few models.
[1] unfortunately the reductions are not additive, combined the reduction is only a bit more than 15%.