Tesla Starts Rolling Out Cars from Shanghai Gigafactory Elon Musk gambled a fortune in Reno, Nevada when he built a "gigafactory" to build thium batteries for Tesla electric vehicles. Together with battery-maker Panasonic, he invested $4.5 billion in the factory. When fully completed, the Reno facility will be the largest factory in the world, capable of producing enough battery packs for 500.000 cars a year. Musk says the sheer scale of the factory will enable Tesla to bring down the cost of battery packs by as much as 30 percent, the most expensive component of electric vehicles Musk has made the same bet again-this time in China. At a cost of $2 billion, Tesla has built another gigatactory in Shanghai and is already producing Model 3 vehicles In 2020 Tesla hopes to build at least 35,000 cars, then ramp up to 500,000 cars annually in a few years. Given the success of the Reno plant, few investors want to bet against him, Source. Media reports of December 2019-January 2020 Instructions: Round your responses to the nearest whole number. a, Calculate the average fixed cost at the Shanghai factory if the 2020 output level (- 35,00o0 cars annualy) were maintained for 10 years. b. Calculate averagolfixed cost if Tesia ramps up output to 500.000 cars a year for 10 years If this higher level of output was attained, average fixed cost would decline by percent.
Tesla Starts Rolling Out Cars from Shanghai Gigafactory Elon Musk gambled a fortune in Reno, Nevada when he built a "gigafactory" to build thium batteries for Tesla electric vehicles. Together with battery-maker Panasonic, he invested $4.5 billion in the factory. When fully completed, the Reno facility will be the largest factory in the world, capable of producing enough battery packs for 500.000 cars a year. Musk says the sheer scale of the factory will enable Tesla to bring down the cost of battery packs by as much as 30 percent, the most expensive component of electric vehicles Musk has made the same bet again-this time in China. At a cost of $2 billion, Tesla has built another gigatactory in Shanghai and is already producing Model 3 vehicles In 2020 Tesla hopes to build at least 35,000 cars, then ramp up to 500,000 cars annually in a few years. Given the success of the Reno plant, few investors want to bet against him, Source. Media reports of December 2019-January 2020 Instructions: Round your responses to the nearest whole number. a, Calculate the average fixed cost at the Shanghai factory if the 2020 output level (- 35,00o0 cars annualy) were maintained for 10 years. b. Calculate averagolfixed cost if Tesia ramps up output to 500.000 cars a year for 10 years If this higher level of output was attained, average fixed cost would decline by percent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:WORLD VIEW
Tesla Starts Rolling Out Cars from Shanghai Gigafactory
Elon Musk gambled a fortune in Reno, Nevada when he built a "gigafactory" to build
thium batteries for Tesla electric vehicles. Together with battery-maker Panasonic, he
invested $4.5 billion in the factory. When fully completed, the Reno facility will be the
largest factory in the world, capable of producing enough battery packs for 500.000
cars a year. Musk says the sheer scale of the factory will enable Tesla to bring down
the cost of battery packs by as much as 30 percent, the most expensive component of
electric vehicles
Musk has made the same bet again-this time in China. At a cost of $2 bilion, Tesla
has built another gigatactory in Shanghai and is already producing Model 3 vehicles
In 2020 Tesla hopes to build at least 35,000 cars, then ramp up to 500,000 cars
annually in a few years. Given the success of the Reno plant, few investors want to
bet against him.
Source. Media reports of December 2019-January 2020
Instructions: Round your responses to the nearest whole number.
a. Calculate the average fixed cost at the Shanghai factory if the 2020 output level (= 35,000 cars annually) were maintained for 10
years.
b. Calculate averagolixed cost if Tesla ramps up output to 500,000 cars a year for 10 years.
c. If this higher level of output was attained, average fixed cost would decline by
percent.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education