It was recently announced that Tesla Motors will build a Gigafactory in Nevada, but as of a few days ago, the land officially belongs to the company. The Gigafactory will be completed by 2020, but production will start in 2017 to build lithium battery packs—cutting battery cost by 30%. In addition, Tesla Motors has encountered tremendous success not only with its stocks but growth rate as well. In the article, Tesla Motors Inc’s Secret Growth Weapon — Hint: It’s Not Cars, Adam Galas states, “Tesla has enjoyed a remarkable 158% compound annual growth rate over the past three years. While that growth rate isn’t sustainable, analysts are still expecting sales to increase 55% this year and 62% in 2015”. Tesla Motors success is due to cars, but other factors are included as well. First, the car company is going to produce 500,000 lithium-ion battery packs a year starting in 2017, and it hopes to cut battery costs by 30%, then up to 50% in 2020.
In addition, Tesla Motors is using energy storage which is projected to be a 50 billion dollar market by the time the Gigafactory will be completed in 2020. Galas also suggests that, the “Gigafactory may be able to manufacture batteries not only for Tesla’s electric cars, but consumer electronics as well. Better yet, there’s a very good chance that Tesla and Panasonic could manufacture these consumer electronic batteries at a cost that makes them ultra-competitive for use in laptops, smartphones, and tablets”.
Not only does Tesla Motors have a great reputation by reducing battery costs, Tesla satisfies its customer needs in several ways. Elon Musk, Tesla’s CEO, has promised to build car Superchargers across the United States so that only Tesla owners can drive around the country without worrying about their car battery. Furthermore, Tesla Motor has partnered with U.S Bank to reduce monthly payments by 25%. The average monthly payment of a customer is anywhere from $780 to over $1,200. Tesla Motors is using this as an incentive to reach their goal of selling at least 17,500 cars this year.
Tesla motors has had success for several reasons. It has proved to have a good reputation, met industry standards, and each car proves to have useful life and be reliable.
Do you agree with these reasons of Tesla’s success? Do you think that the success will last? What do you think makes Tesla different than the other competitors? Also, what do you think of Tesla building the $5 billon Gigafactory?
Sources:
http://online.wsj.com/articles/tesla-unveils-lower-cost-lease-plan-1414427518
Tesla is an interesting company to look to when speaking about innovation. In addition, as a investment analyst Tesla is a very volatile stock which leads to potential massive gains and losses within a span of a day or even few hours. The company while being an innovative thinking company, is plagued by scandals and controversy such as the car which set on fire. Musk himself is looked to as a modern day innovator and many people in the business world are always watching for him to come out with his next move. Tesla in my opinion always lacked stability as the electric business is so unpredictable. By creating this factory I think Tesla is branching out of just the car business and is a very smart move. The current demand is for batteries which last a long time as we live in such an electronically centered world. your last sentence in my opinion is incorrect. Tesla is far too new to have accomplished any of those feats. In fact most people think Tesla is an interesting company but would never buy a car due to the recent controversies. In addition, certain states such as NJ are banning the sale of Tesla cars. That does not sound like a company with a good reputation to me. Tesla has much work to do to prove their company is reliable and established.
I am a huge fan of Tesla and their unprecedented level of innovation. Considering their innovative and proven quality products, I think they deserve every bit of their recent success. The fact that their is a several year waiting list is a testament to their proven product and customer service. I know two different people that recently received their Tesla after a three year wait, and both said it was 100% worth the wait. The only complaint I have heard is the battery life not lasting as long as they would like, but it sounds like this is their number one priority for improvement. I expect great things from Tesla and their new factory in the future. As far as the comment from Rebekah, the banning of their sale in certain states is an argument I can agree with both sides on. I believe protecting the middle man (car dealers) is important, but I think the company should have the right to sell/market in any way they feel is best for their company (so long as it is legal/ethical). The gigafactory is going to give a lot of momentum to Tesla along with the electronics industry as a whole. Tesla is going to be on the rise for awhile and I look forward to tracking their progress. Thanks for a great post!
Tesla is always coming up with innovative ideas. First were the electric cars. Now Tesla is going to build a Gigafactory. By building the Gigafactory, Tesla is reducing the cost battery but at the same time expanding the production line. Tesla is not only offering cars to the market but is going to offer batteries used for cars, lap tops, tablets and cell phones. On the other side by building the factory in Nevada, Tesla is going to open a lot of new jobs in the Reno area. Also around the factory a lot of restaurants, hotels and roads are going to be build. By reducing the monthly payments by 25%, there is a high probability that a lot more people are going to buy Tesla cars. By offering this deal with U.S. bank Tesla cars are going to be more affordable for customers. By adopting to the market changes and coming up with plans on how to distinguish themselves between competitors, Tesla’s success will definitely last.
I always enjoy reading about Tesla considering that they’re the first ones to try to break into such a competitive market. I believe there is a lot more to come from Tesla. Elon Musk recently removed all patents on Tesla’s technologies, which indicated that he doesn’t just want to see his company grow, he wants to see the whole electric car market grow.
Tesla is a truly remarkable company because they have been able to break into the automobile market, which not only has a very large barrier for entry and is seen by many as impregnable due to the longstanding car companies like the Big 3. This post is so interesting because it discusses the future plans of the company to maintain its position as the top of the electric automobile manufacturer. I think that this gigafactory’s ability to produce batteries at a lower cost will only contribute to Tesla’s further success and will help it stay at the top of the market as competition increases. I agree that those reasons are significant factors in the success of this company, but as for the future success of Tesla, I think it is too soon to say. BMW is the second largest producer of electric cars and they just started full-scale production this year, so while I think Tesla has a unique approach and position, I am waiting to see how the larger automakers will respond in the coming years.
Great post, I do believe that if successful the building of the $5 billion Gigafactory will be a great asset to Tesla. Being able to expand and offer reliable and efficient batteries will increase their market share, paving the path for more success. As far as success lasting, being the first to offer something innovative and high-quality definitely brings a competitive advantage, but technology is always changing, with the introduction of its new batteries, I believe there is a great chance that competition will be aggressive. We will have to wait and see if Tesla can maintain its high level of success.
This is a great post. Until recently I have not really been paying attention to the growth of Tesla but I have seen more people driving them recently. Most consumers do not want to sacrifice luxury to have an eco-friendly car and Tesla has listened to those consumers. I think the building of the $5 billion Gigafactory is a great addition and asset to Tesla. The continuous expansion will allow them to enter the market smoothly and continue to grow in the market. Although the technology side of the automobile industry seems to be competitive, I think Tesla will be able to maintain their high status and be extremely successful