Tesla target 20 million car sales but need new models

The Renault-Nissan Alliance under former CEO Carlos Ghosn is probably the classic recent example of how growth-led expansion can kill profits if it’s not matched by customer demand.

However, at Investor Day, Musk was dismissive of any lull in demand for his company’s cars. “The desire to own a Tesla is extremely high,” he said. “The limiting factor is being able to pay for it.”

Number of Teslas delivered each year

Tesla’s intense search for economies of scale has led to a ruthless trimming of variety. It restricts options – except those that can be added via software updates – to speed up manufacturing and will digitally interrogate its cars to see how much those it does offer are being used. An opening sunroof was deleted because of this, said Tesla.

This aversion to variety, which strongly recalls Henry Ford and his quip about offering any colour so long as it’s black, extends to models as well as options. Musk said Tesla can hit 20m with just 10 models. “The number seems low,” said Roeska.

The trouble is that one or two sizes rarely fits all. “It’ll be very hard to launch a product and try to sell it globally in the next three to five years,” said one executive at a Chinese car maker competing with Tesla.

However, Tesla is diversifying. The “next-gen” Tesla is “not just one vehicle but multiple”, said Lars Moravy, head of vehicle engineering, indicating that the car maker is creating a scalable platform along the lines of Volkswagen’s MEB. There’s also the Cybertruck arriving this year, a niche vehicle largely confined to the US in terms of demand. The Roadster is another niche car somewhere in the plan.