In a discussion about Tesla’s role in the electric car industry, CEO Elon Musk told YouTuber Marques Brownlee that the company is focused on producing more affordable cars. Musk called a $25,000 Tesla a “maybe” in three years, depending on volume and scale.
Brownlee interviewed Musk earlier this month in Tesla’s Fremont, California, factory, which houses the assembly lines for the Tesla Model S, Model X, and Model 3.
The interview started with Brownlee asking Musk to talk about the future of electric cars. Musk compared electric car development to producing cell phones. Over the years, with each successive successful technological iteration, cell phones became smaller, more feature-packed, and less expensive to produce. Supported by high sales numbers, massive production scaling enabled cell phone manufacturers to continue development.
It’s the same with cars, according to Musk. “In order to make the cars affordable, you really need high volume,” Musk said.
“The cars need to scale because the other car companies make a lot more cars than we do, they’ve got way better economies of scale.
“So, as we’re gradually able to build up and do more cars with high volume, then we can build them for less money and then make the cars available to a wide range of people. But it’s super, I mean to say the car industry is super competitive … it’s like insanely competitive.”
Musk told Brownlee Tesla does not spend money on advertising or endorsements. Instead, Tesla relies on word-of-mouth sales based on recommendations from customers who love to talk about their cars.
The key is to get customers excited about their cars, and then they will talk about them, Musk told Brownlee.
Musk also said the company doesn’t give discounts, that he pays retail for his own Tesla cars.
With all the talk about getting customers excited, Brownlee asked Musk what Tesla is excited about in the near future.
After stating that Tesla has “way more product ideas than resources to execute them,” Musk said he’s excited about developing multiple vehicles simultaneously, which is difficult for a smaller company. In the past, Tesla has only “done” one car at a time.
Now, according to Musk, the question Tesla is facing is, “How do we do two cars at one time and still make them great products?”
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