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Tesla guides EV industry’s shift from niche production to mass market

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As Tesla continues to push the boundaries on automation in its factory production line, 2018 could be the year when the company and the electric vehicle (EVs) industry shifts from being seen as niche production to the mass market. Noting that roughly 1.3 million EVs were sold around the world in 2017, a 57 percent increase over 2016 sales, global consultancy McKinsey predicts that EVs’ share of total passenger vehicle sales could reach 30 to 35 percent in major markets like China, Europe, and the US by 2030. In partnership with automotive benchmarking specialist A2Mac1, McKinsey took a deep dive into EV technology, and identified four strategies that automakers should follow to remain relevant as the industry transforms itself.

EVs reached a major milestone in 2017. The main obstacles to mass market adoption have been driving range and price. With the launch of Tesla’s Model 3 and GM’s Chevy Bolt, both of which offer a range of over 250 miles, McKinsey believes that the range issue has basically been solved, and that automakers can now focus on reducing price points, either by increasing design efficiency or reducing manufacturing costs. To be successful at this, McKinsey believes they will need to follow four technical strategies.

1 – Build native electric vehicles

Native EVs – cars built on a custom electric platform, rather than adapted from legacy fossil-fuel vehicles – cost automakers more to develop, but offer multiple advantages. A native EV doesn’t have to be designed around bulky components that are no longer needed, such as drive shaft tunnels and exhaust systems, so it can accommodate a bigger battery pack. The pack can also be placed where it makes the most sense – at the bottom of the vehicle. This “skateboard” design, made famous by Model S designer Franz von Holzhausen, has since been copied by other automakers. Not only does it improve handling by giving the vehicle a lower center of gravity, it also opens up much more space for passengers and cargo.

2 – Push the boundaries of powertrain integration

McKinsey’s benchmarking revealed a continuing trend toward EV powertrain integration: EV-makers are integrating components such as inverters, motor controllers, etc, into fewer modules. One indicator of the increased level of integration is the design of the electric cables connecting the main electric powertrain components (battery, motor, power electronics and thermal management). McKinsey observed a decrease in both cable weight and the number of parts in the latest electric models compared with earlier vehicles.

EV powertrains are inherently more flexible, as the components are smaller, and designers have more freedom to place them in the best positions to optimize space. McKinsey found that the Chevy Bolt seems to use an ICE-like positioning of its powertrain electronics, whereas the Tesla Model 3 integrates most components directly on the rear of its battery pack and rear axle.

3 – Stay ahead in the technology game

Electric vehicle customers tend to be tech-savvy – they expect to have the latest driver-assistance systems, connectivity features and infotainment goodies. This almost obligates EV manufacturers to equip their vehicles with the highest levels of technology available. However, McKinsey sees this as an opportunity, as it creates a great testing field for the new technologies that OEMs and third-party providers are developing.

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Vehicle controls are steadily migrating from physical knobs and switches to a more central, smartphone-like user interface. Of course, Tesla’s Model 3 is the ultimate example of this, but most EVs are following the trend of clearing the clutter. “We observed EVs in our benchmark that have as few as seven physical buttons in the interior, compared with 50 to 60 in many standard ICEs,” says McKinsey.

Rimac Concept_One digital controls being demonstrated at Monterey Carweek

Behind the scenes in vehicles’ electronic control units (ECUs), the trend is also toward more consolidation. Legacy autos are controlled by a jumble of different computer systems, often from different suppliers, that talk to each other in limited ways or not at all. Once again, Tesla led the way. In a 2014 interview, Tesla founder Ian Wright told me that his 2008 Volkswagen probably had “sixty or seventy electronic black boxes, 300 pounds of wiring harness, and software from 20 different companies in it.” Tesla’s vehicles use one central computer system. “The major reliability problem with those cars is the electronics and software,” said Wright. “I think Tesla did take a real Silicon Valley systems architecture perspective in designing all the electronics in the Model S.”

In an EV, electronics and software are the heart of the vehicle, and Wright predicted that, as the majors began to produce EVs, they would eventually be forced to adopt a more systems-oriented approach. McKinsey found that this prediction is coming true. Automakers are finding that a centralized approach gives them the chance to own a key control point in the vehicle, helps to save on weight and costs, and may improve reliability. Central, high-power ECUs “could also be the backbone for developing fully autonomous driving.”

4 – Design to cost

Legacy automakers are still struggling to make a profit on their EVs, mainly because of high battery costs (not Tesla, which claims to be earning margins of over 20% on Model S and X sales). Now that the range issue has been more or less solved, McKinsey believes OEMs will need to apply design-to-cost (DTC) strategies to produce EVs at attractive price points while earning decent margins. Fortunately, this something that established OEMs and suppliers are good at, so they may be able to quickly catch up. For example, improvements in battery technology may allow automakers to switch from lightweight but costly aluminum to more cost-efficient steel (a shift Tesla has already made with Model 3).

Can the traditional automakers make money in the volume EV market? Many industry observers are skeptical – one reason for the companies’ reluctance to embrace EVs may be that they see them as a lower-profit proposition. In the first public acknowledgment of this dynamic, Daimler recently announced that it foresees an end to profit growth this year, partly due to the high costs of making the shift to EVs. Certainly, it’s difficult to imagine that any EV will ever yield the prodigious profits of a vehicle like Ford’s F-150 pickup, which has been called the most profitable consumer product in history.

However, McKinsey believes that, if automakers heed its sage advice and take the aforementioned four EV design steps into consideration, they should be able to reduce the higher manufacturing costs of EVs and find their way to a positive mass-market business case. An era of profitable mass-market EVs could be on the horizon, and that would be good news for consumers, the environment – and forward-looking automakers that are willing to take some risks and embrace change.

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Note: Article originally published on evannex.com by Charles Morris; Source: McKinsey / A2Mac1

EVANNEX carries aftermarket accessories, parts, and gear for Tesla owners. Its blog is updated daily with Tesla news.

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Elon Musk

Elon Musk breaks his silence on the Starlink impact to Ukraine drones

Musk says the US military and president set Starshield limits, not SpaceX, amid Ukraine complaints.

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Elon Musk says the speed limit cutting out Ukraine’s military Starlink terminals is not SpaceX’s decision. In a post on X Wednesday, Musk wrote that “Starshield systems are owned and controlled by the US government. Any limits on speed or usage are decided by the US military and ultimately POTUS.” He added that Starlink is a commercial service limited to civilian or defensive activities and “cannot be used for offensive military action, as doing so would be inappropriate for a commercial company.”

He was replying to Mykhailo Fedorov, Ukraine’s former defense minister, who had thanked Musk for restoring connectivity at speeds up to 160 km/h and said removing the Starshield limit entirely is “now critical for Ukraine’s defense.”

The complaint started Tuesday night, when Ukrainian officials said military terminals began losing service above roughly 100 mph. Presidential adviser Serhiy Beskrestnov said the defense forces got no warning and several missions were disrupted, as Teslarati reported earlier Wednesday. The 7th Rapid Reaction Corps told Reuters connections dropped for 10 to 20 seconds at speeds well below the limit, which made drones harder to control. Poland’s foreign minister, Radoslaw Sikorski, asked Musk on X whether he is “playing politics with your products again.”

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That is why the Starlink and Starshield distinction matters. SpaceX introduced Starshield in 2022 as the government version of Starlink, with an initial focus on Earth observation, communications and hosted payloads. It won a Space Force contract in 2023 with a $70 million ceiling. In December 2024, the Pentagon moved Ukraine’s terminals onto Starshield, covering about 3,000 units across two contracts. Ukraine’s military connections therefore run through a service that Musk now says sits under Washington’s control.

SpaceX pitches subscription model for Trump’s Golden Dome

While Musk’s post describes who holds authority, it does not infer that anyone ordered the limit, and neither SpaceX nor the US government has confirmed who set it. Ukrainian officials have pointed to the timing, which follows President Trump’s push for an energy ceasefire and Musk’s Saturday post that “Zelensky has gone too far.” The BBC noted Trump denied threatening to restrict intelligence sharing with Kyiv, and no evidence has been presented that Washington requested the cap.

The episode also revives a promise from 2025. After Poland accused him of threatening Ukraine’s access, Musk said Starlink “will never turn off its terminals” and would not be used as a bargaining chip. Poland has since supplied more than 29,000 terminals to Ukraine. Teslarati also covered Kyiv’s search for Starlink alternatives in 2025, and the latest dispute gives that search new urgency.

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Investor's Corner

Tesla opens the Q&A for its biggest earnings call yet

Tesla opens its Q3 earnings Q&A, and Cybercab, Robotaxi, Optimus and regulators loom over October 21.

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Tesla has opened its shareholder question portal for the Q3 2026 earnings call, with the Say Q&A page already listing questions. Investors have until 4:00 p.m. EDT on October 20 to submit and vote on what management should answer.

The call is set for Wednesday, October 21. Tesla will post results after the market closes, with a live webcast at 4:30 p.m. CT, or 5:30 p.m. ET, through its investor relations site.

Say ranks questions by the number of shares behind the votes, which gives institutional holders extra weight over the retail crowd.

Ahead of Q2, retail investors asked why Robotaxi growth had stalled, when Cybercab would start customer rides, and where the Optimus Gen 3 ramp stood, while an institutional holder asked how Tesla and SpaceX would split Terafab duties. Cybercab has since answered one of those. Tesla said last week it has 300 plus Cybercabs serving Austin, up eightfold in 30 days, with Dallas named as the next city. The questions now are likely to move from when to how fast.

There is also a regulatory question hanging over the call. NHTSA has demanded sworn answers on how the pedal free Cybercab was certified against federal safety standards, with responses due October 30, nine days after the call. Whether an analyst raises it live is unknown, but it is the kind of exposure that tends to find its way into a Q&A.

The numbers will not be the main draw. Tesla already reported 486,532 deliveries and 13.7 GWh of storage for the quarter. Consensus sits around 43 to 45 cents per share on roughly $27.8 billion in revenue, according to Zacks, after a Q2 report that missed on EPS. Goldman Sachs, which holds a Neutral rating and a $360 target, argues the outlook for Robotaxi, FSD and Optimus will matter more to the stock than the quarter itself.

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The call also lands six days after the rescheduled Roadster event, which Tesla will stream on X on Thursday, October 15, at 7:55 p.m. CT. If the Roadster shows up with a production date or a SpaceX thruster package, expect it to climb the voting list before the deadline.

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FAA kicks off review of SpaceX’s bid to fly Starship nearly every day

FAA is reviewing SpaceX’s plan for 456 Starship launches a year, up from 25 today.

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Rendering of Elon Musk overlooking a Starship fleet (Credit: Grok)

The FAA said Tuesday that it will prepare an environmental impact statement on SpaceX’s proposal to run as many as 456 Starship launches and 912 landings a year from Starbase, Texas. SpaceX is currently authorized for 25 launches and 50 landings annually, which makes the request roughly 18 times the existing ceiling. The notice of intent is set to publish in the Federal Register on Wednesday.

The plan comes in two phases. Phase 1 would allow up to 100 launches and 200 landings a year, on any day and at any hour. Phase 2, which the FAA says could arrive within several years, would raise the limit to the full 456 launches, still at any hour but only on weekdays. The agency noted that 912 landings is the upper limit for the Texas facility no matter where a given mission begins, and that Starship and Super Heavy could come down at the launch site or in the Gulf and open ocean.

A draft statement will be released for public comment at a later date, and the FAA has not said when. According to the Federal Registar, written comments are due November 30 on regulations.gov under docket FAA-2026-12808, with in person scoping meetings on November 17 in Brownsville and November 19 in Port Isabel, plus a virtual session on November 18. The review will weigh air quality, wildlife, coastal resources, water, noise, and aviation, and the FAA said any increase beyond this proposal would need its own separate review.

The numbers look large next to what Starbase has actually done. Starship has flown three times from Texas this year, including Flight 14 on September 28, the first orbital flight, which deployed 26 Starlink V3 satellites. Bloomberg reported that Starbase has never launched more than five times in a calendar year. The current cap of 25 comes from an FAA approval in May 2025. In February, the agency also approved up to 44 Starship launches a year from Launch Complex 39A in Florida, so Phase 1 in Texas alone would more than double that allowance.

Musk has said Starship could eventually fly more than once per hour within less than a decade, per Bloomberg. The nearer term target is Flight 15. Musk said on October 10 that it is hopefully four to six weeks away and will try to catch the ship with the tower, as Teslarati covered. That flight still runs under the existing 25 launch limit, and so would every Starbase launch for as long as the new review takes.

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As of mid morning Pacific time on Tuesday, SpaceX had not posted about the filing on its own account.

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