The luxury electric car maker Tesla Motors’ (TSLA, Financial) share price has appreciated by 84% since the beginning of the year. This highlights the efficiency of the company and its ability to sell electric vehicles. Its last quarter results were also ahead of analysts’ expectations. The top line was 54% higher than last year’s quarter, clocking in at $858 million. Also, its bottom line stood at $0.11 per share, beating the estimate of $0.07 per share. Further, it reaffirmed its outlook for the year.
Deal with Toyota comes to an end
However, the company recently announced that its collaboration with Toyota Motor (TM, Financial) has come to an end. The deal between the two car manufacturers was to sell a plug-in version of the RAV4, which was sold for $50,000. But, after selling 2,000 units in the last two years, the companies plan to part their ways. One of the reasons why RAV4 did not resonate with customers was its limited battery range, which was just 100 miles. This problem is quite similar to that of Nissan Leaf. Nonetheless, the companies also assured that they would come back with a better and a bigger project in the years to come.
On the other hand, Toyota will not have any electric vehicles in its list of offerings by the end of this year, as it shifts to hydrogen fuel cells instead of electric cars. The company plans to expand its manufacturing capacity in Mexico. Indeed, Mexico is eyed by all the vehicle manufacturers mainly because it is cheaper to produce cars in the region. Operating and labor costs are lower in Mexico.
Although Toyota has plants in Mexico, none are full assembly plants, which produce the cars from beginning to end. Thus, expansion into this region should lower Toyota’s cost structure in the future.
Tesla still looks attractive
Tesla is indeed known for its innovative and high-end electric cars, which saves fuel. Its Model S has been successful, with higher number of deliveries with each passing quarter. It delivered a total of 7,579 Model S units in the last quarter and expects to deliver 7,800 of them in the third quarter.
Tesla is also looking forward to the launch of Model X. This is Tesla's first SUV and will hit the market next year. Pre-orders for this car have already been rising at a fast pace as customers are anxiously waiting for this high-end car. By 2017, Tesla estimates it will sell a total of 129,000 units of Model S and Model X on an annual basis.
Further, in order to boost the usage of electric vehicles and to make people’s lives simpler, Tesla has a number of supercharging stations, which charge cars for 170 miles in 30 minutes. It plans to open Gigafactory, in order to produce batteries for half a million cars per year. This will reduce the cost of making batteries, making its cars cheaper.
In conclusion
Both Tesla and Toyota are making logical moves to grow their business, and each of them are trying to find ways to reduce costs. However, Tesla’s success story and its new forthcoming model should help further increase its sales. The new Gigafactory will also help in producing low-priced electric vehicles. Therefore, despite the end of the collaboration with Toyota, Tesla’s future looks bright.
