High Voltage: Tesla’s plan for a US$25k electric vehicle ‘could break the car market’
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
High prices have been one of the main impediments to universal electric vehicle uptake.
While the cost/price gap between EV and ICE is steadily closing — thanks to falling battery costs (the most expensive part of an EV) and more streamlined and scaled manufacturing processes – many car makers are still taking a haircut on each EV they sell.
This is where Tesla stands head and shoulders above the rest, according to recent data from Visual Capitalist:
Tesla is an EV pioneer with a profit margin miles bigger than its competitors, including incumbents like GM, Ford and VW.
Tesla’s net profit margins were far ahead of the competition, bringing in $9.5K/car sold while GM, the closest competitor, had a net profit margin of just over $2K/car. $TSLA has created room to lower their car prices which could squeeze less-profitable #EV manufacturers out. pic.twitter.com/8MuPmSjmp4
— Wilshire Phoenix (@WilshirePhoenix) March 6, 2023
One of the key takeaways from Tesla’s Investor Day presentation last week was a plan to cut manufacturing costs for its next generation of vehicles by a further 50%.
The new processes are not going to be used for Tesla’s current model line, but for a new car that company currently refers to only as “the next-gen vehicle”.
It is widely expected to be a small car: a mass-market entry-level EV that would sell for significantly less than the US$43,490 price of a basic Model 3, says Ram Chandrasekaran, Wood Mackenzie’s head of road transportation.
A 50% cost reduction will have a huge impact on sales of EVs.
“If Tesla can sell its new model for US$25,000, that will be revolutionary,” Chandrasekaran says.
“It will break the car market.”
With about US$22 billion cash at the end of last year, Tesla is well positioned to achieve the next phase of its growth, but Chandrasekaran cautions that its ambitions still present daunting challenges.
“It has grown to a company selling one million-plus cars a year, but it is looking at an enormous step beyond that,” he says.
“Now it wants to get to four or five million, and more, and only a handful of companies have ever done that.
Elon Musk’s goal of 20 million vehicles a year would give Tesla twice the production of Toyota or VW at their respective peaks, Chandrasekaran says.
“Musk’s record as an entrepreneur is undeniably hit-and-miss. But given the scale of his hits, it would seem rash to bet that he will fail.”
Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, magnesium, manganese, and vanadium is performing>>>
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SRN says a new exploration target of 682Mt to 1190Mt @ 0.2% to 0.43% vanadium propels its Victory Bore project in WA to “world class status”.
When added to the current 321Mt @ 0.39% resource, the exploration target boosts the project’s potential to 1003Mt-1,511Mt @ 0.2% to 0.43% V205, “making it world class and potentially one of the largest vanadium resources in the world”.
An update on the PFS – a look at the economics of building a project – is due in the next few weeks, SRN says.
“The extensive linear continuity of the Victory Bore Titanomagnetite and high vanadium grades where we have drilled provide a compelling prediction of the total scale of this vanadium project,” managing director Paul Burton says.
“When proven, it would place this project as one the world’s largest undeveloped vanadium resources and given its good location only 400km from port and proximal to existing infrastructure means it is a hugely valuable asset for Surefire shareholders.”
The WA explorer has a portfolio of battery metals/critical minerals projects covering lithium, nickel and ultra-rare rubidium.
The stock has crept higher on no news over the past week or so, attracting a ‘please explain’ from the ASX.
In response the company says volatility coincided with exploration drilling at the Narndee nickel-PGE project.
“Assays for Narndee have been expedited, with resulted expected in the next two weeks,” it says.
“As announced on 31 October 2022, the company has previously disclosed its intention to secure a suitable JV partner or offtake partner for its Niobe [lithium rubidium] project.
“Preliminary discussions/due diligence is currently underway however there have been no further developments at this stage.”
ARN recently released a maiden resource for the ‘Niobe’ lithium-rubidium project of 4.6Mt @ 0.17% Rb2O and 0.07% Li2O, equivalent to 8,060t of Rb2O and 3,080t of Li2O.
Mineralisation remains ‘open’ at shallow depths.
A new drilling program is planned to grow the resource size and upgrade the classification.
It is also pushing ahead with development approvals and a scoping study, the first proper look at the economics of building a mine.