Tesla Motors recently announced plans to build a $5 billion battery factory, the

Question

Tesla Motors recently announced plans to build a $5 billion battery factory, the largest in the world. Assume Tesla sells its Model S cars for $70, 000 and each Model S currently costs $60, 000 to manufacture. The new factory will cut Tesla's costs by about $7, 500 per car, but Tesla doesn't plan to change the selling price of the Model S. How many Model S electric cars will Tesla need to sell to cover the costs of the new factory? a. 2, 000, 000 cars b. 500, 000 cars c. 285, 715 cars d. 71, 429 cars

Explanation / Answer

Model S cars=New factory cost/CM per car=5,000,000,000/70,000-60,000=500,000 cars

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