At the celebration of battery day, Elon Musk pledged that a Tesla model would be available for $25,000 in three years; yet, many individuals doubt this news.
Tesla car is so expensive because of the following reasons.
- The High Cost of Tesla Batteries
- Market-Leading Electric Motors
- Import Taxes on Tesla Cars
- Advanced Technology “Computer on Wheels”
- Extensive Network of Superchargers
- Self-Driving Software
- Cutting-Edge Safety Systems
- Next-Generation Tech Features
- Additional Hardware Features
- Top-Notch Service Centers
Elon Musk has a reputation for overstating his abilities; however, we expect Tesla to begin formally manufacturing this vehicle by 2025.
This raises the question of why Tesla intends to produce a vehicle priced at $25,000 in the first place. Elon Musk has said on several occasions that he is aware that Tesla automobiles are costly but that the company cannot sell cars at cheaper pricing.
This leads to another question: why are Tesla cars so expensive? The price of Tesla vehicles is high, but that hasn’t prevented customers from waiting in line to get one.
One of the reasons the price is so high is because there is now a greater demand than supply; however, growing production capacity and building new facilities will undoubtedly assist in maintaining price stability.
The very high cost of the electric battery packs that power Tesla vehicles are the second primary factor that contributes to the very high sticker price of Tesla automobiles.
Although the cost and energy efficiency of batteries have decreased over the last few years, there is still a need for more study and development to develop a genuinely inexpensive EV.
Why a Tesla Car is So Expensive – The Secret Tesla Motors Master Plan
The Secret Tesla Motors Master Plan (just between you and me) was the title of a blog post that Elon Musk wrote in 2006. In a nutshell, Elon Musk’s grand scheme consisted of:
- Construct a Sports Automobile.
- Put money into the production of an automobile that is reasonably priced.
- Put money into a vehicle that is even more reasonably priced.
- In addition to those mentioned above, give options for generating electric power that does not produce any emissions.
Lithium-ion batteries, the high import tax on different nations, and the sophisticated hardware and software in Tesla vehicles, such as self-driving hardware, sentry mode, dashcams, and other similar features, all contribute to the high cost of Tesla automobiles.
In addition, Tesla spends a significant amount of money on constructing and maintaining its Supercharger networks and cutting-edge infotainment systems.
These systems include arcade games, Google Maps and Browsers, and streaming services such as Netflix, YouTube, Spotify, Hulu, DisneyPlus, etc. Additionally, Tesla invests a significant amount in research and development and business expansion.
1. The High Cost of Tesla Batteries
The high price of lithium-ion batteries is the key factor that contributes to the high cost of Tesla vehicles. Although there has been consistent development and advancement in battery technology, the cost has not yet reached a reasonable level.
Due to the high cost of lithium-ion batteries, electric vehicles, including Tesla and other available brands (BMW, Nissan, Ford, Kia, and Chevrolet), are prohibitively costly.
On the market, you could sometimes come across an electric car with a cheaper price tag; nevertheless, automobiles with a lower price point often come with significant functionality reductions—either in terms of its performance or its range.
The high cost of lithium-ion batteries that come with all Tesla models may be attributed to different variables, but the following are the most significant ones:
- The price of the essential components (the most expensive of which is cobalt).
- The difficulty and length of time involved in producing the cells.
- An absence of scale-based economic benefits.
- The cutting-edge battery technology — solely developed by Tesla.
Long story short, there is currently no other electric car manufacturer available on the market that can compete with the efficiency, range, and functionality of a Tesla.
2. Market-Leading Electric Motors
Electric motors are very sophisticated pieces of technology, and their construction calls for a significant investment of time, labor, and materials.
In addition to this, they demand a significant amount of skill in both production and engineering, enabling them to be produced in huge quantities.
It is essential to be aware that the electric motors used in modern automobiles may be broken down into two distinct categories: AC induction motors and permanent magnet motors.
While most other electric vehicle manufacturers rely on permanent magnet motors, Tesla employs induction motors used in Chevrolet’s Bolt EV.
A standard induction motor is nothing more than a rotor that rotates inside a stator. The electricity that flows in an alternating current (AC) provides power to the stator.
This energy is then transformed into rotational torque on the rotor shaft by a magnetic field, which causes the shaft to spin and propels your vehicle ahead.
3. Import Taxes on Tesla Cars
In contrast to many other automakers, Tesla has just two production facilities. One is in the United States of America, and the other is in China.
However, the China plant exclusively produces the Model 3 and Model Y for the Chinese market at this time. So, all of Tesla’s vehicles are sent out of the United States.
There is a wide range of variations in the import tax percentage among nations. For example, the whole import tax in Germany is at a rate of 19 percent, but in India, it is 100 percent.
Therefore, Tesla vehicles are much more costly due to import tax, especially outside the United States.
4. Advanced Technology “Computer on Wheels”
Elon Musk correctly identifies Tesla as “a computer on wheels” in his description of the company’s product. These automobiles are equipped with the most cutting-edge computers currently available.
Each Tesla vehicle is equipped with its own personal computer, on which the company designs its processors, graphics processing units (GPUs), and neural network processing gear.
Tesla’s AC motors and battery packs are both designed and manufactured in-house as well. On top of that, some automakers contract out the production of specific components to a third party.
5. Extensive Network of Superchargers
Superchargers may be found all over the globe, thanks to Tesla’s efforts. There is no other manufacturer that has even close to Tesla’s massive charging network; therefore, only if you own a Tesla will you be able to take a road trip across the nation in an electric car.
In addition, the cost of charging is relatively inexpensive for these superchargers. Tesla even sells power at the same price it pays to buy it at some sites. Elon Musk has said that Tesla’s supercharger network would never function as a profit center for the company.
Electrify America is an electric charging network that serves as an alternative to Tesla’s Superchargers.
However, this network is not nearly as extensive as Tesla’s, and it has far higher costs. In addition, Electrify America is not offered in countries other than the United States.
As the number of Tesla vehicles in operation increases, the company will need to set up more charging stations.
It demands an investment of tens or even hundreds of millions of dollars. Moreover, the expense of maintaining and running these superchargers is rather pricey.
Additionally, Tesla has formed partnerships with the proprietors of third-party businesses to place destination chargers at such businesses.
Restaurants, hotels, parking garages, shopping malls, and other public establishments fall under this category.
6. Self-Driving Software
Each vehicle that Tesla sells comes equipped with all necessary hardware for fully autonomous driving.
Tesla’s self-driving software is now the most sophisticated in the industry, even though the company has not yet achieved complete autonomy.
Tesla constantly upgrades the self-driving software and distributes it to their vehicles through over-the-air updates. Developing both hardware and software requires a significant financial investment.
To our knowledge, no other automaker except for Tesla offers any hardware directly associated with fully autonomous driving technology, making the Tesla models relatively cost-efficient.
7. Cutting-Edge Safety Systems
One of the most reliable and secure automobiles on the market today is Tesla. Every Tesla car has received the maximum possible safety rating of five stars from various regulatory agencies worldwide, including those in the United States, Europe, Australia, and China.
All of Tesla’s models are equipped with cutting-edge safety systems, making them very secure to ride in and drive.
Whether day or night, on a sunny or rainy day, or on a steep or mountainous road, it does not matter since it includes all the required safety elements you need when driving.
Additionally, all of these safety elements are offered at no additional cost, so there is no need to spend additional money on these things.
With a superior mechanical design, Tesla spends a lot of money on research and development to produce risk-free automobiles.
8. Next-Generation Tech Features
One factor contributing to the exorbitant cost of Tesla vehicles is the cutting-edge technology and amenities that the company provides, which are not available on any other automobiles.
Tesla automobiles are equipped with the most cutting-edge software of any vehicle globally. Every Tesla comes equipped with a web browser, Caraoke (also known as Karaoke for vehicles), and Google Maps.
The following is a list of features that are exclusive to Tesla automobiles:
- Sentry Mode
- 360 Dashcam
- Dog Safety Mode
- Bioweapon Defense Mode
- Summon Mode (Self-Driving Park Mode)
- Over-The-Air Updates (Software Updates)
- Streaming Services (Netflix, DisneyPlus, YouTube, Hulu)
- Arcade Games (Cuphead, Centipede, Beach Buggy Racing 2, Fallout Shelter, Missile Command, Super Breakout, Lunar Lander, Asteroids, and Tempest)
9. Additional Hardware Features
Imagine going to a conventional auto dealer to purchase a vehicle powered by an internal combustion engine (ICE) and asking for a sunroof installation.
In that case, they will tack on an additional minimum price of $2,000 for a moonroof or solar roof of any size. However, with Tesla, this is not the case. All Tesla models come with a complete glass roof that is UV-radiation-resistant.
Aside from that, it also has front and rear heated seats as standard equipment, side mirrors that automatically fold and heat up, a heated steering wheel, washer nozzle warmers, and windshield wiper blade defrosters, depending on the model.
10. Top-Notch Service Centers
Compared to more conventional automakers like Ford, General Motors, Toyota, etc., Tesla offers a unique proposition.
These companies do not sell their automobiles to individual customers directly. Instead, they sell them to dealerships, hardly ever interacting with actual customers like you and us.
In addition, these dealerships are responsible for all of the cars’ maintenance needs. However, Tesla does not have any dealers. They offer automobiles to end-users via their website, Tesla.com.
Moreover, Tesla customers are not permitted to DIY vehicle repairs. Only Tesla service centers are authorized to perform maintenance and repairs, as stated in the Tesla Terms and Conditions (T&C).
Every Tesla comes with a comprehensive warranty covering the battery, engine, MCU, and motor. Therefore, if a problem emerges, Tesla will remedy it at no additional cost to the consumers.
In addition to that, they provide the owner with either Uber credit or a loaner car.
Considering all these factors, Tesla requires a significant amount of money to run and maintain these service facilities.
As a result, every time Tesla sells a vehicle, they need to ensure a substantial profit margin. This is another factor that contributes to the high cost of Tesla automobiles.
The Final Cut
Tesla is the first brand that comes to people’s minds when the topic of electric automobiles is brought up since it was the first company to develop automobiles powered only by electric batteries.
However, despite the growing demand for their automobiles over the last decade, the company’s high costs continue to be a challenge. Why is this the case?
In a nutshell, the high cost of Tesla vehicles is not due to the company’s greed but due to billions of dollars spent on producing these most technologically sophisticated vehicles.
Even if the reasons for the high pricing of Tesla automobiles have been discussed above, this does not indicate that Tesla is incapable of producing an inexpensive vehicle.
Tesla has formed partnerships with other businesses, including Panasonic and LG, to bring down the price of its batteries. But that wasn’t the end of it for them.
As discussed initially, Elon Musk publically announced the production of vehicles with a lower starting price of $25,000.
He further said that Tesla wants to accomplish this aim primarily via a battery pack that is one-half the current battery’s cost. Musk indicated that the automobile would be introduced to the public by 2025, but he has not provided any specific details on the vehicle’s appearance.
You may like the following Tesla electric car articles:
- What Color Tesla Electric Car Should I Get?
- How Much Does It Cost to Charge a Tesla Electric Car?
- How to Wash a Tesla Electric Car
- Tesla Electric Car Model X Versus Model Y: Which is the Better Electric Vehicle?
- How to Check a Tesla Electric Car’s Battery Health
I am William and I am a car lover and electric cars expert. I will provide here information about electric cars, the pros, and cons of electric cars, the price range of electric cars. I will provide you honest reviews of electric cars, various electric car accessories, etc. Check out our articles on electric bike buying guide, Check out more.