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Are Teslas expensive?

Are Teslas expensive?
source: electrek.co

Are Teslas expensive? : If the sophisticated technology and excellent capabilities of Tesla vehicles don’t make your jaw drop, the listed price certainly will be costly.

It’s no secret that Tesla cars and SUVs are expensive. They have become a sign of wealth worldwide and rival brands like Mercedes and BMW in status and performance. But why is a vehicle with fewer moving parts much more expensive than a classic car?

Tesla vehicles are expensive because they are made with the best materials and sophisticated technologies. Tesla components are designed in-house, and their development costs billions. Additionally, designing and producing unique materials like batteries is expensive.

Tesla’s supply chains and manufacturing processes are highly complex. Who must do much of it in countries like the United States for quality and safety, which naturally drives up the end product’s price? Considering the considerable cost needed to produce these vehicles, it is remarkable that they are not more expensive.

Information used in this article is sourced from reputable automotive news organizations, industry analysts, and Tesla itself, when available.

Is Tesla a luxury car brand?

Tesla sells cars at luxury prices. That’s indisputable. However, the company has repeatedly announced that it intends to break into the affordable car market. The Model 3 was the first vehicle targeting the mid-range sector and was massively successful.

Tesla has always included sophisticated technologies in all of its offerings. Many features, such as autonomous driving and advanced infotainment, are usually reserved for luxury cars. This indicates that any Tesla on the market today falls into the luxury car category.

Except for the Model 3 and possibly the Model Y, Tesla is primarily a premium car brand. However, the upcoming launch of a $25,000 hatchback (commonly known as the Model 2) aims to change that. Tesla will likely one day become a more comprehensive automaker, producing both premium and affordable electric cars.

Are Teslas expensive? and Why are Tesla cars so expensive?

There are myriad reasons why Tesla vehicles are so expensive. On closer inspection, it’s remarkable that Tesla cars and SUVs don’t cost more than they do.

The main reasons why Tesla vehicles are:

  • Such an expensive area due to strict internal research and development.
  • The way the company operates.
  • The types and quality of materials needed to build electric cars.

Here are why Tesla cars and SUVs are so expensive and why the price is much more reasonable than it seems.

Cutting-edge design

Tesla vehicles are packed with a fantastic amount of advanced proprietary technology. After all, every new Tesla is equipped with all the sensors it needs to drive itself – less than two decades after cassette players became standard in luxury cars.

The development of all these advanced technologies has cost billions. Hundreds of thousands of hours of work are needed to create it, and hundreds of thousands more to test it before selling it to the public.

Additionally, Tesla is the first completely new major auto company to expand independently in the United States in more than 50 years. The scale of building a successful and advanced automotive business without prior automotive manufacturing experience is nothing short of monumental.

Of course, much of this rapid expansion has been funded by venture capital and investors. However, Tesla devotes a considerable portion of its profits and revenue to research and development to continue producing vehicles with advanced technologies.

Material quality

Tesla produces some of the safest and highest quality cars on the market. With a life expectancy of over 800,000 km and impressive build quality across all model lines, it’s clear that quality parts are of the utmost importance to Tesla.

They say you get what you pay for, which is valid for Tesla. Anyone who’s ever compared a Tesla to an equivalently priced National car can attribute the vast difference in quality. Even the door closes more securely.

But the quality goes beyond the finish. Tesla engineers just can’t cut corners on some critical (and expensive) components. Batteries, for example, have to be exceptionally well made because lithium-ion cells tend to explode if completed incorrectly.

Also, Tesla wants to make the best electric cars in the world. Therefore, it needs the quietest and most powerful electric motors, the most careful design, and the most robust materials to maintain its excellent level of safety.

In-house research and development (R&D)

You can still find components in new Toyota vehicles used in the 1990s because they work, and the research and development have already been written off. This is not the case at Tesla.

Tesla does not have an inventory of old parts such as window motors, door hinges, and powertrain components that it could reuse for the following year. Therefore, the company has to design every tiny detail for every vehicle, and it can’t spread the cost over decades.

Also, cashless technologies are so advanced that they cannot be outsourced to places where they are cheaper to manufacture. Finally, much of this technology is protected by patents and is too important to be risked in collaboration with other companies.

Difficult supply chains

The vast majority of parts used by domestic automakers could, in theory, be manufactured domestically. There was a time when Ford produced vehicles in a massive factory where iron ore and silica sand went in one side and finished cars came out the other. This obsolete manufacturing model and most car manufacturers source their parts from many countries.

On the other hand, Tesla produces a surprising number of parts in the country where the cars are sold. It is mainly the United States. This is because Tesla vehicles use large quantities of specialized parts and materials that are not readily available in acceptable quality or quantity.

Additionally, many of the raw materials used to make Tesla vehicles, primarily lithium for batteries, are more widely available in troubled parts of the world where prices and production are unreliable. Tesla tightly controls its supply chains because they are highly competitive, and the company demands the highest quality raw materials.

Tesla’s new Gigafactory Nevada will soon produce batteries domestically, a drastic move from a company that exclusively sourced batteries overseas. Tesla is trying to increase the reliability of its supply chains by building factories in the United States, which naturally drives up prices.

However, this approach is reasonable despite high initial costs. Advanced automation and increased production could eventually drive down the cost of locally produced batteries while maintaining testing as high as quality standards. In other words, you’re paying the price now, but it’s worth it in the long run.

Size of the company

Another reason Tesla vehicles are expensive is that the company isn’t big or old enough to cut costs like traditional automakers. For example, when General Motors introduces a new sedan, it may use many parts from previous models it already has in stock.

Most other car manufacturers have been around for almost a century and have vast inventories of parts, machine tools, and more than enough resources to stretch them as long as possible. This is why GM can sell a car for less than $20,000, while it takes Tesla a decade to break into the affordable car market.

Are Tesla vehicles subsidized?

Indeed, Tesla and many other futuristic projects of Elon Musk are subsidized for various reasons. Electric cars from other companies and other alternative fuel vehicles have been sponsored for many years.

The government has justified subsidizing electric companies based on environmental impacts. The theory was that if electric cars were more affordable, people would buy fewer petrol and diesel cars, reducing carbon emissions.

Some issues, such as the environmental impact of lithium mining and battery disposal, are still being debated. If the primary objective is to reduce carbon emissions, electric cars can undoubtedly lead the way to cleaner air if their cost becomes competitive with conventional automobiles.

In recent months, Elon Musk has expressed interest in decoupling Tesla from government subsidies, but only time will tell. And contrary to popular belief, Tesla would be profitable with or without support. Although if they were removed, the average Tesla would likely cost consumers more.

Will the price of Tesla cars go down?

Inflation aside, it’s highly likely that the cost of new and used Tesla vehicles will go down over time. This is evident since a new Model 3 now costs about the same as a mid-level sedan.

Pricing for the Cybertruck, which will be Tesla’s most advanced offering yet, will match the average price of a new pickup truck sold in America. Electric cars are more affordable than ever, and they’re finally competitive with relatively inexpensive vehicles like the Mercedes C-Class and Toyota Avalon.

Thank you for reading. I hope this article Are Teslas expensive?

Read Also: Which is the cheapest car, Tesla?

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