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Tesla Inc (NASDAQ: TSLA) has reportedly figured out a technological breakthrough that will transform the process of making electric vehicles. Fine-tuning the process will help Tesla cut production costs considerably. Tesla stock closed 1.75% higher at $276.04 on the news.
Five people familiar with the matter spoke with Reuters anonymously. According to these persons, Tesla is working on this innovation, a way to die cast almost all of the underbody of its vehicles, instead of nearly 400 individual parts. This “gigacasting” process is part of an “unboxed” model CEO Chief Engineer Lars Moravy announced in March, where Tesla factories snap sub-assemblies together. This means that the manufacturing or assembly process of the average Tesla would be considerably less complex, take way less time, and be cheaper. However, many doubt that the model of making sub-assemblies and snapping them together would be difficult for cars of all sizes.
According to some analysts, making and fusing these blocks do not allow for enough manufacturing variables. Nonetheless, most consider the process revolutionary if it works. According to the president of engineering firm Caresoft Global, Terry Woychowski, the Tesla breakthrough would disrupt the automobile design and manufacturing industry if successful. It may then allow Tesla to price an EV under $30,000, much cheaper than the cheapest Model 3 – a little over $40,000. Woychowski said:
“It is an enabler on steroids. It has a huge implication for the industry, but it’s a very challenging task. Castings are very hard to do, especially the bigger and the more complicated.”
According to the people who spoke to Reuters, Tesla could use a single frame in its small EVs by combining the front, middle, and rear sections. If this is functional, Tesla could begin selling cars for $25,000 sometime after 2025. Some of the sources added that Tesla is likely to make a decision on die-casting its cars as one piece before the end of September. However, they noted that the design validation process could change the end product’s design.
Last month, Tesla introduced cheaper variants of its EVs to maintain sales levels as demand fell. The company now has new versions of its Model S sedan and the Model X SUV, however, with shorter driving ranges. The new S model has a maximum of 320 miles, lower than the two existing versions at 395 miles and 405 miles. Furthermore, the new X SUV has a maximum of 269 miles, compared to the existing one with 348 miles.
According to a Morgan Stanley prediction, Tesla is poised for a significant increase in valuation thanks to its Dojo supercomputer. Analysts at Morgan Stanley believe that Dojo, used to train the company’s Full Self-Driving (FSD) System, could add $600 billion to Tesla’s market cap over the next 18 months. Morgan Stanley also increased its TSLA price target to $400, a 60% jump. In response to the upgrade and Morgan Stanley’s prediction that Tesla will sell AI tech to several other auto manufacturers, Tesla’s share price rose by more than 10%. TSLA has climbed more than 11% in the last 5 days and over 28% in one month.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Although Li Auto realized a substantial revenue increase for Q3 2022, the company’s operating costs also rose.
Li Auto Inc (NASDAQ: LI) recently posted its Q3 2022 earnings report, which revealed a wide quarterly deficit despite a 20% increase in revenue. For the third quarter, the Chinese electric vehicle manufacturer raked in revenue of $1.31 billion but missed the consensus estimate by $60 million. Li Auto’s vehicle sales surged 23% on higher average selling prices, with the delivery of some models beginning in late August. However, the EV maker also incurred more expenses on developing these new car models for the period ending September 30th. The company’s total vehicle deliveries for the third quarter were 26,524 units, representing a 5.6% increase year-over-year (YoY) increase.
As it stands, the 73% jump in operating costs for Li Auto erodes its stronger sales outing. The Beijing-headquartered EV manufacturer attributed its third-quarter expense increase to higher research and development costs. Most auto manufacturers have incurred rising material expenses due to the global semiconductor (chip) shortage. Nonetheless, Li Auto stated that it anticipated a production scale-up and higher deliveries due to easing global supply chain constraints.
Li Auto’s operating expenses more than doubled on a higher headcount. In addition, the electric vehicle maker also sustained a more extensive net loss in Q3 2022. This deficit grew from 21.5 million yuan a year earlier to a staggering 1.65 billion yuan, or $236.8 million.
Meanwhile, Li Auto’s gross margin sank to 12.7% in the third quarter from 23.3% in the year-ago quarter. The company’s latest gross margin figure also reflects a sizable drawdown from the 21.5% it stood at in the second quarter of this year.
Despite the unsavory development in Li Auto’s financial report for Q3 2022, the company’s chief financial officer, Tie Li, remains upbeat. Providing an assessment of Li Auto’s operational projections, Li explained:
“Looking ahead, we are optimistic that with rapid production ramp-up, rigorous execution, and responsible cost management, we will realize greater economies of scale and further drive down costs, putting us back on track to hit our profitability inflection point.”
Although Li admitted that Li Auto weathered a “challenging macro environment and cost inflation,” the company’s Q4 guidance remains strong. According to the Chinese EV manufacturer, vehicle deliveries for the fourth quarter could be between 45,000 and 48,000 cars. In perspective, this guidance represents an increase of 27.8% to 36.3% from last year’s fourth quarter. Furthermore, this suggested production ramp-up could also net Li Auto a 65.8% increase in revenue of between 16.51 billion yuan and 17.61 billion yuan.
Whether Li Auto will achieve its Q4 delivery target remains to be seen. However, the EV manufacturer is fast closing in on the total number of vehicles dispatched for the third quarter. Its combined number of deliveries made since October currently tops 25,000 units.
At the end of the third quarter, Li Auto had 271 retail stores across 119 cities. In addition, the company also operated 316 servicing centers and authorized body and paint shops in 226 cities.
Read more business news here.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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