Tesla Motors' progress simply electric
There are many ways to measure Tesla Motors Inc.'s remarkable progress in the three years since the electric-carmaker released its initial public offering. There's the first-ever profitable quarter this spring. There's the nearly perfect 99 out of 100 score in Consumer Reports' review of the Model S sedan. There's the stock price, up more than 500 percent since June 2010 and currently trading around $109 a share.
Then there's this: Tesla, which is on track to build 21,000 cars in its Fremont, Calif., factory this year, is worth more than Fiat and nearly a quarter as much as General Motors — which has 21,000 dealers.
In a considerable understatement, Tesla CEO Elon Musk told shareholders this month: “This has been a great year. Things have really gone pretty well. I'm having a lot more fun these days.”
But while Tesla has proved it can make an expensive electric car, it has not yet met its goal of making an affordable one, and its long-term success may hinge on its ability to drive down battery and manufacturing costs and create a car in the $35,000 price range.
“The biggest single challenge for electric vehicles is affordability,” Musk acknowledged at the shareholders meeting. “If we could build the Model S for half the price that it currently costs, and solve the long-distance travel problem, then we'd see widespread adoption. That's what's needed for there to be a huge tipping point for electric cars. We're trying to advance that as fast as we can. I'm hopeful that we'll be there in three to four years.”
Tesla says it plans to roll out what it calls the “Gen 3,” a smaller version of the $72,000 Model S at about half the price, in 2016 or 2017. Before then, sometime next year, it plans to start delivering the Model X, a crossover between an SUV and a minivan.
Prices for the Model X have not been announced, but Tesla hopes to deliver the Gen 3 at a much lower cost than the Model S because it will spend much less on research and development. It also expects battery technology to improve, allowing it to use smaller, less expensive batteries than those that power the Model S. Also, as it produces cars in higher volumes, Tesla should be able to negotiate cheaper part prices from suppliers.
The company's success to date stands in sharp contrast to onetime competitors Coda and Fisker, both of which have spectacularly flamed out in their efforts to build and sell electric vehicles.
“Tesla is the one shining light in the EV industry,” said Mike Omotoso, an analyst with LMC Automotive in Troy, Mich. “You have to give Elon Musk a lot of credit. He has experience as a CEO, and he assembled a great team. He brought in Detroit guys early on, and he hired a lot of people with the know-how to engineer and manufacture the car successfully.”
The challenge for Tesla in the near term, many analysts say, is for it to keep demand for the Model S high while making steady progress on the other vehicles in its development pipeline. But some analysts say Model S sales, which have been strong thanks to pent-up demand, could flatten in the second half of the year.
“Right now, everything looks good because Tesla is selling anything it can build. People have been on a waiting list for months,” said Alan Baum, who runs an auto industry market research firm in West Bloomfield, Mich. “The challenge for Tesla is to keep demand up. The Model S is a phenomenon, but how long can that go on?”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Insurer Aetna to buy Humana in $35B deal
- Alpha Natural Resources buys out European partner in Marcellus venture
- U.S. calls Fiat Chrysler recall record dismal
- Critics find hotels’ hidden fees to be inhospitable
- Obama overtime proposal slammed
- Stocks end tumultuous week on down note
- Michigan study: Consumer sentiment index highest since January
- Right age for benefits? It depends
- Heinz executives to dominate post-merger management of Kraft Heinz Co.