Tesla CEO Elon Musk reported yesterday that after moving production of its batteries from Asia to California in late 2007, the cost to build its roadster has been cut almost in half, from $140,000 to $80,000.
Musk says in his blog that the move eliminated the high cost of shipping heavy batteries overseas, while simultaneously improving the quality of the batteries because of a more automated process and the ability for engineers to tweak the batteries quickly for new efficiencies. In addition to eliminated shipping costs, the move also reduced the time it took parts to move through the supply chain, removing the cost of inventory waiting for weeks in transit.
In the same blog posting, Musk drives home the point that many of the Roadster’s inefficiencies stem from decisions made by former CEO Martin Eberhard. Eberhard and Musk have been verbally sparring over the last few weeks since Eberhard filed a lawsuit against Tesla. Musk claims he’s needed two years “to do a near complete reset on the Roadster program,” adopting an apologetic tone explaining that the Roadster cost “will never be what Eberhard had promised.”
Despite those hang-ups, Tesla seems to be doing quite well. With a sticker price of $109,000 and production volumes of between 20 and 30 vehicles per week in the third quarter, Musk expects Tesla to enter into profitability as soon as July.
Tesla is also expected to be on the list of recipients that will receive federal loans to produce electric cars. U.S. Energy Secretary Steven Chu will reveal the recipients later today in Dearborn, Mich. Now all Tesla needs to do is lower the price of the Roadster so the average consumer can own one. We’ll be impatiently waiting.