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This Automobile Company is Gaining Good Momentum

June 26, 2014 | About:

Tesla Motors Inc. (NASDAQ:TSLA) designs, develops, manufactures and sells electric vehicles and advanced electric vehicle powertrain components. Tesla cars are manufactured in a far different manner than traditional vehicles: They have one standard battery platform on which they can mount varying motors and bodies. This swappable production strategy gives the company an advantage in achieving production efficiencies.

Brighter 2014

In 2014 Tesla is planning more cars than ever before. CEO Elon Musk is confident that Tesla can hit an annualized rate of deliveries that exceeds 40,000 cars per year by late 2014. Tesla will begin deliveries of its Model X in late 2014. Thanks to the success of its Model S, there's already a strong brand presence for the company. This should help boost sales of its crossover vehicle as more Model X cars hit the road later this year.

Blending the benefits of a minivan with the performance of a sports car, the Model X promises to a big hit with drivers in 2014. Built on the same drivetrain as Tesla's Model S, the Model X can go from zero to 60 miles per hour in 4.4 seconds. Tesla first unveiled the all-electric SUV in February 2012, and last year pushed production of the Model X into late 2014 to accommodate sales of its Model S vehicles. Moreover, shares of Tesla should pull ahead later in the year if Tesla can deliver on its revised promise of getting the Model X on the road in 2014.

The U.S. economy

Tesla's $5 billion Gigafactory project to build the world's largest factory for lithium-ion battery production is the beginning of an influx of new jobs for the U.S. The Gigafactory alone will not only create thousands of jobs, but Tesla's rise to prominence over the next seven years could create as many as 100,000 jobs from indirect support.

What the Future Would Be Like

Tesla has just announced the offering of $1.6 billion in convertible notes--bonds that can be converted into a specified number of shares in Tesla. Additional $120 million offerings will raise the potential offering size to $1.84 billion--money Tesla will use to fund the development and production of what it calls its “GEN III” mass-market vehicle, a more affordable electric vehicle following the Tesla Model S and the upcoming Model X crossover.

The Model S has now been on sale for over a year and a half, the first models reaching customers in June 2012. Since then the company has sold over 25,000 units, and is set to follow up the electric sedan with the Model X crossover within a year. All-wheel drive and unique "falcon wing" doors will be standard, while performance and range may not be far removed from the Model S. The "Gen III" model will sit on an entirely new platform when it follows a few years later, and while the touted 200-mile range won't match that of its larger brethren, an expected $40,000 price tag is sure to make a dent in the market for more affordable electric vehicles.

There's little mystery over where components for the new model may be build, though. Tesla expects to outgrow its current Fremont facility in future, and recently announced plans for a “Giga factory” to produce battery packs for its future vehicles. At the moment, the EV-maker buys in packs from Panasonic, but growing sales for its "Gen II" Model S and Model X vehicles and predicted growth from the cheaper sedan has prompted Tesla to investigate in-house battery production. The end goal is to accelerate the pace of production, but also to save money on producing the packs.

Quizzed over a new, more affordable Tesla, Musk reassured that a cheaper car, thought to be a BMW 3-Series and Jaguar XE rival, is coming within three years. He predicted it will cost “around $35,000, or £25,000” but the cheap running costs will equate to it being a “£15,000 - £20,000 car”. The Tesla supremo also confirmed the purported ‘Model E’ name isn’t going to adorn the 2017 production car.

Meanwhile, the Model X crossover will see its first US deliveries in late 2014 and reach the UK in right-hand drive in late 2015.

To End

Entering the vehicle market without the normal constraints and biases that bog down traditional manufacturers has helped this California-based company become a wild success in the car market. All these factors are building the foundation for the company's eventual mass-market affordable car. And each factor helps to secure Tesla's spot among the big automotive companies, and change the auto industry forever.

Meanwhile, the demand for Tesla’s cars remains strong on robust performances and impressive designs of its products. Model S ensures the least possibility of injury to passengers among all major car makes and models in the U.S. The car won a five-star vehicle safety rating from the National Highway Traffic Safety Administration, which is awarded to only 1% of the cars tested.

Rating: 2.0/5 (1 vote)



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