Can Tesla Build 20 Million Cars Per Year By 2030?
The company is expanding its Gigafactory fleet with a new facility in Mexico, but building a third of the world’s new cars in just seven years is a stretch.
Tesla’s Elon Musk is on record proposing that the electric car company could produce as many as 20 million electric vehicles (EVs) by 2030. Musk has made clear that this is more of an aspirational goal than a hard and fast number. Tesla’s total production in 2022 was 1.37 million vehicles, a 47 percent increase over 2021. This was spread over the car plants in Freemont, California, and Shanghai, China, as well as startup production in the company’s new plants in Austin, Texas, and Brandenburg, Germany. The company also has a battery gigafactory in Nevada.
Image used courtesy of Tesla
Why 20 Million Electric Vehicles?
The 20 million number has some basis in reality. There are roughly 2 billion vehicles on the road today, and they will all need to be replaced by electrically powered vehicles if climate change is to be controlled. Musk has said that replacing just 1 percent of those 2 billion vehicles per year means there will need to be 20 million EVs, and his goal is for those vehicles to be made by Tesla.
In the first quarter of 2023, Tesla announced that it would expand its Nevada Gigafactory, investing $3.6 billion to gain another 4 million square feet to provide room for 4680 battery cell production and space to build its Tesla Semi over-the-road truck. The company also announced at its March Investor Day event that it would be building its sixth Gigafactory in the Mexican state of Nuevo León.
Nevertheless, the idea that Tesla could build 20 million cars per year seems to stretch credibility. Worldwide car sales in 2022 were 66.1 million (down from 66.7 million in 2021). The biggest manufacturer in 2022 was Toyota, with a total of 10.5 million sales, while number two, Volkswagen, sold 8.3 million vehicles (its lowest sales in a decade, dragged down by COVID, the war in Ukraine, and the continuing semiconductor chip shortage.)
Toyota and Volkswagen have a broad product range, including trucks, luxury cars, and economy vehicles, while 95 percent of Tesla’s sales in 2022 came from the Model 3 and Model Y vehicles. Its other two product lines, the Model S ( production began in 2012) and Model X (production began in 2015), accounted for around 5 percent of total sales. The company expects its Cybertruck pickup truck will begin production before the end of 2023 in the Austin Gigafactory, and its heavy-duty Semi truck has entered pilot production in Nevada. Tesla has said a next-generation lower-cost vehicle will be produced in Nevada and Mexico, but the timing has been a bit sketchy on this new product.
Tesla Cybertruck. Image used courtesy of Tesla
How Realistic is Tesla’s EV Goal?
How realistic is Tesla’s 20 million EV per year goal? First, it amounts to a third of all vehicles built during 2023. It is more than the production of number one Toyota and number two Volkswagen combined.
Gigafactories Needed for EV Production
The production facilities or Gigafactories needed to build so many cars present a problem. Assuming that each of the existing Gigafactories and the new Mexican factory could make 1 million cars yearly by 2030, the total would be around 6 million. Historically, it took Tesla about three years to go from its announcement to building cars at a new location. This is commendable, but to reach 20 million by 2030 would mean that the company will need to build at least 12 to 14 new Gigafactories between now and then in locations that have yet to be announced. To meet a 2030 timeframe, all of them would need to be underway before 2027, just four years from now.
Tesla Gigafactory Freemont. Image used courtesy of Tesla
New Electric Vehicle Models
The massive buildout of new Gigafactories would need to take place at the same time as the development of several new car models. With the Model S 11 years old and the Model X six years old, both vehicles are due for replacement or at least significant updates. The new next-generation vehicle (Model 2?) and the Cybertruck and Semi are currently under development. Musk has said that the 20 million EVs can be reached with ten vehicle models, so if, along with the Model 3 and Model Y, five are current, five all-new models will need to be developed in the next seven years.
Tesla Semi. Image used courtesy of Tesla
One of the keys to Tesla’s success in the EV segment has been a lack of any real competition. This is changing as automakers worldwide have committed to changing away from internal combustion engine (ICE) gasoline vehicles to entirely EVs by 2035. As good and popular as Tesla models have been over the past decade, the company faces real competition from the likes of Volkswagen, Hyundai, Ford, General Motors, Mercedes-Benz, BMW, and ultimately Toyota, Nissan, and Stellantis, as well as newcomers from China. Each will want to chip away at Tesla’s market and do so with attractively priced and competitive models.
There is also a question about the amount of raw materials available for lithium-ion battery production in 2030. Lithium production is one of the primary concerns as carmakers worldwide are scrambling to meet their anticipated needs with long-term contracts and the purchase of mining companies to ensure their supply. Tesla is a strong competitor here, but if it expects to build a third of the world’s vehicles in 2030, it will need to scoop up most of the world’s battery raw materials supply. New battery technologies that use fewer materials to produce the same energy are under development but will not be mainstream by 2030.
Betting for or Against Elon Musk and Tesla
History has shown it is never smart to bet against Elon Musk and Tesla, no matter how outlandish his pronouncements may seem. As a goal, the 20 million EVs by 2030 doesn’t seem possible for a single company. Time will tell how Tesla does it, and it will be interesting to see.