Tesla‘s Model S Sedan will be profitable for the company, even at lower volumes thanks to its cheaper batteries. While Tesla says it only needs 20,000 vehicles a year to make money, whereas competitors like Nissan need to move 500,000 units annually to amortize the R&D costs of their EV systems.
Tesla’s battery systems are powered by thousands of lithium-ion cells, similar to a multitude of laptop batteries. This “off-the-shelf” technology allows Tesla to spend far less money on R&D, as a solution is available and already proven. The biggest challenge for Tesla, according to an analyst quoted in the Bloomberg article, will be to expand from selling 1,000 Roadsters a year, to moving some 20,000 Model S sedans, an exponential increase in volume for the start-up automaker.