Musk compared Tesla to a "world-class ship." "When storms come, even big ships face challenges." Samuel Garcia, governor of the Mexican state of Nuevo Leon, said during a trip to Shanghai on October 18 that Tesla's two Chinese suppliers will invest nearly $1 billion in the northern Mexican state of Nuevo Leon, where Tesla is planning to build a new factory.
According to reports, the two companies are Ningbo Top Group, a supplier of automobile shock absorbing products and other parts, and Hesai Technology, a lidar manufacturer. The two companies will invest US$700 million and US$260 million respectively.
Hesai Technology did not comment to China Business News on the investment plan. However, according to a reporter from China Business News, the company has not yet supplied Tesla on a large scale. As of press time on October 19, the share price of Tuopu Group (601689.SH) fell by more than 2%.
Garcia said the Nuevo León plant, from which Tesla already sources batteries, software, computers and other components, is likely to be at least twice the size of the Austin plant.
However, the current schedule for Tesla's Mexican factory is unclear. At the third quarter financial report meeting on October 18, Tesla CEO Musk said that before starting factory construction, he hoped to have a clear understanding of the global economic situation. He emphasized that "cost reduction" will be Tesla's most important task in 2024, both in terms of engineering and factory operations.
Musk admitted his views are "paranoid" when it comes to the current state of the global economy, which he said could be affected by ongoing conflicts around the world. He compared Tesla to a "world-class ship." "When storms come, even big ships face challenges."
The third quarter financial report shows that Tesla’s profits and revenue both declined, the industry profit margin dropped significantly from 17.2% last year to 7.6%, and the gross profit dropped 22% year-on-year. Tesla's stock price fell more than 4% after hours.
Musk brought up the impact of high interest rates on consumers' willingness to buy cars. "If interest rates remain high or higher, it will become more difficult for people to buy cars," he said during the earnings call.
In order to make electric vehicles affordable to more people, Tesla has been working hard to reduce costs. "I can't stress the importance of cost enough. We have to make the product more affordable so people can buy it," Musk said. "Reducing the cost of Tesla cars is like Game of Thrones."
According to Tesla's presentation to shareholders, the company's cost of sales per vehicle fell to about $37,500 in the third quarter. But the company said production costs at the new plant are still higher than at the existing plant and that it implemented necessary upgrades in the third quarter.
Tesla's research and development spending is also rising. In the third quarter, the company's research and development expenses were $1.16 billion, up from $733 million in the same period last year. Tesla says this is largely due to investments in artificial intelligence. According to reports, Tesla has more than doubled its artificial intelligence training computing scale in the past quarter. Musk previously revealed that Tesla is using an end-to-end machine learning method to rewrite the automatic driving assistance system FSD.
However, when asked during the earnings call when Tesla would finally launch fully autonomous driving software, Musk did not provide a specific timetable.
Musk previously stated on the The plant's annual output can reach 125,000 vehicles. Tesla has not yet announced pricing for the Cybertruck.