Why Tesla's new electric car will be significantly cheaper than Model 3 and Model Y

“We have to rethink manufacturing.”

That's what Tesla believes will ensure its next generation of cars will be faster to build, and cheaper to buy.

During Tesla’s ‘Investor Day’, various senior staff and executives took to the stage in Tesla’s Texas HQ to detail new developments in the electric car brand’s processes and plans for the future.

But Lars Moravy, Tesla’s vice president of vehicle engineering, had the most to say about the much-rumoured next-generation model planned by the brand.

Tesla’s next car, currently referred to as the Model 2 by speculators, isn’t a secret, with CEO Elon Musk having flagged his desire for a US$25,000 (AUD$39,900) Tesla model during an event in 2020.

More recently, Musk has said the goal for this next platform and car is to build two of them for the same effort it takes to build one Model 3.

While the Tesla Model Y brought with it new processes and manufacturing ideas, the brand now has a clearer plan to halve the effort and cost it takes to build a car.

“Henry Ford invented this in 1922, it’s been 100 years, and it’s really hard to make a change after 100 years,” Mr Moravy said, outlining how inefficient the current standard manufacturing process is.

“It’s actually really silly… you take all these stamp panels, you put ‘em together, then you put them in a framing station, you build a body that looks something like a car, you put the doors on, then you paint it.

“Once you’ve got the colour, you take the doors off, then you start putting the interior inside the car through the openings that already exist. There are people coming in and out of the car, there’s awkward movements.

“Then we lift the car up, we put stuff in underneath it, then we put the seats in the car, and finally we close it up with glass and bring those doors in that went away for a trip.

“Most of the time we’re doing this with a big giant car, moving it, and doing nothing with it at all.”

While he acknowledges the processes have been better streamlined in the century since they were conceived, he said the brand must “rethink manufacturing” if it wants to significantly increase production and lower costs.

Moravy said one of the biggest inefficiencies of the process, aside from the requirements to take the car’s full body around during production, is that only a limited number of people can work on it at once.

Tesla plans to build the car in separate chunks, allowing the same number of people to work on part of the car that would otherwise work on the whole car.

“What that means is… we’re going to build all the sides of the cars independently, paint only what we need to, then we assemble the parts of the car once, and only once.

“The interior is attached from bottom-up or top-down, so there’s more access for robots or people. We aren’t moving heavy objects around and doing nothing to it, so we’re doing more work on the car more of the time.

“We take all of these tested sub-assemblies and we finally assemble the car one time.”

While he said this will halve costs when compared to Model 3 and Model Y production, Lars Moravy also expects this to reduce the required factory footprint per car by 40 per cent.

In 2020, Musk said “it was always our goal to make an affordable electric car. And we're confident that in around three years from now we'll be able to make a very compelling US$25,000 electric car that's also fully autonomous.”

While it’s 2023 now, and plans haven’t quite met the deadline, we can expect to see the next Tesla taking shape relatively soon.