The bets are open.
In just under 48 hours, Elon Musk, the whimsical and charismatic CEO of Tesla (TSLA) will make a presentation eagerly awaited by the markets, the automotive industry and consumers alike.
During this Tesla Investor Day, scheduled for March 1, the techno king promised announcements for a future that is "bright."
For the moment there is only one certainty he will unveil volume 3 of Tesla's Master Plan that day. The Master plan is the mission that Musk assigned to Tesla, that of transforming transportation and saving the planet from dying from pollution.
A Tesla Model 2?
The rest is speculation fueled by the billionaire himself. For example, in recent weeks he has disseminated various pieces of information about the highly anticipated Cybertruck, Tesla's very first pickup truck with a futuristic design, suggesting that he will unveil the model promised for mass production this March 1st.
Production of the Cybertruck, whose order book is full, is due to begin later this year.
Musk also hinted in a cryptic message that he might unveil a new vehicle. He has indeed retraced the history of the Teslas by emphasizing the star products starting from the Roadster to the Cybertruck, the Model 3 sedan, the Model S luxury sedan, the Model X luxury SUV and the Model Y SUV. Once these models were launched, Tesla started, last December, to produce the heavy-duty-Truck Tesla semi, which will be followed shortly by the start of production of the Cybertruck.
This is where it gets interesting since Musk replaced the arrows with three dots, ... These three dots suggest that a new vehicle will follow the Cybertruck if we compare to the past where he traced it with arrows.
The company has not launched a new vehicle since 2019.
For many experts, Musk will unveil the Model 2, a vehicle whose manufacturer suggested retail price (MSRP) -- the price that the manufacturer recommends dealers or shops to sell a vehicle at -- will be $ 25,000.
"With Musk’s 'Master Plan 3' we expect a slew of updates on the product roadmap which will likely include Cybertruck updates/timing, Semi Truck delivery updates, and the roadmap to what will ultimately be a vehicle in the $25k range. Big focus the global production ramp for TSLA," Wedbush analyst dan Ives said.
Cheaper to Produce
A $25,000 car would allow Tesla to reach 80% of the automotive market which currently escapes the Austin, Texas-based group.
"We expect Model 2 15% shorter, 30% lighter and 25% smaller battery than Model 3," said NewStreet Research analyst Pierre Ferragu.
The analyst, who is a Tesla bull, explained that the Model 2 makes sense for Tesla even from a cost perspective. It would cost less to develop and produce, which would justify its price of $25,000.
"We expect Model 2 37% less expensive to build than Model 3. Half the difference derives directly from the car being smaller, the other half mostly from design, architecture, and manufacturing innovations."
The difference with the Model 3, for example, the entry-level vehicle today from Tesla whose base price is $42,990, comes from the fact that, for example, the cost of labor is $2,400 for the Model 3 while it would be $1,200 for the Model 2, Ferragu has calculated. In total the manufacturing costs of a Model 3 amount to $8,500, against $5,100, said the analyst.
The Model 2 would bring Tesla closer to its goal of producing 20 million vehicles a year by 2030 and make inroads into emerging markets like India. The vehicle would also become a direct competitor of the Toyota Corrolla whose starting price is $21,550, according to the Japanese carmaker.
"Implications: $TSLA can maintain a gross margin heading towards 30% for autos, with Model 2 and FSD both increasing in the mix. Moreover, at $25k MSRP, Model 2 addresses 80% of the car market and paves the way for Tesla to exceed 12m units and $400bn auto revenues in 2030," Ferragu said.
FSD stands for full self driving which is the advanced feature of the standard driving assistance of Tesla cars that is Autopilot. It currently costs $15,000.
Ferragu added that: "Because of the IRA, to get a $25k cost to the customer, Tesla can retail it for $32,400 in 🇺🇸."
IRA is the Inflation reduction Act which encourages the mass adoption of green vehicles by extending the $7,500 federal tax credit to 2032.
Musk has promised that Tesla will produce 20 million vehicles a year by 2030, making it the world's largest automaker. Last year, Tesla produced 1.37 million vehicles. The Model 2 would allow the company to give itself the means to achieve its goal.
