It is now quite easy to design and roll out a new car. Certainly as
compared to what was possible two decades ago. Yet folks have gone
out and tried over and over again. The bad news is that they are all
dead.
I also learned years ago that investors are all car experts and must
be shown an incredibly sexy car.
The real problem is volume manufacturing and distribution. The one
company today that could pull it off is Magna. The rest out there I
simply do not see.
The only way to break into the global market is to produce a super
cheap car in huge volumes and buy market share as did Volkswagen and
Toyota and everyone else.
The other way around has famously never worked.
Tesla's hope was that the electric protocol would open a door except
all the manufacturers are gearing up for that same niche and they can
buy market share.
AUGUST 14, 2012
Technology Review -
Elon Musk is considered one of today’s most audacious technology
entrepreneurs. But even he recognizes that Tesla Motors is entering a
challenging period for the electric vehicle company.
Tesla began production
of its second car, the Model S sedan in June. This month, the company
said that it would meet its target of delivering 5,000 Model S
vehicles this year.
Aol Energy - Elon said "The challenge Tesla faces over the next several months,which is a very difficult one, is to scale up production and achieve enough of a gross margin on the product that we get to a situation where we're cash flow positive. If we aren't able to do that we will join the graveyard of all the other car company startups of the last 90 years."
Musk said that if margins improve, Tesla would begin making "a couple of 100,000 units" of its 3rd generation car with a $30,000 sticker price and 20%-25% lighter than the Model S.
"We can show that it's technologically possible to other manufacturers. If Tesla doesn't make it I hope we have nonetheless served that purpose. I don't want to sound dour but it's definitely going to be a tough six months."
Competition for
plug-ins is heating up. The major automakers, including Ford, General
Motors, Nissan, and Toyota, have all released plug-in vehicles which,
although more expensive than comparable gasoline cars, have a lower
price than the Model S. Tesla is also meeting competition from
hybrids and EVs in the luxury category as well.
Musk last week said the company can’t afford to make many mistakes over the next six months.
"We can show that it's technologically possible to other manufacturers. If Tesla doesn't make it I hope we have nonetheless served that purpose. I don't want to sound dour but it's definitely going to be a tough six months," he said, according to AOL Energy.
If sales of the Model S and Tesla's Model X SUV don’t materialize as hoped, Tesla does have other sources of revenue. It currently supplies electric powertrains to other automakers, including Toyota for its RAV4 Electric. It is also working with SolarCity, another company Musk has invested in, to supply batteries to back up WalMart’s solar panels at 90 stories. Tesla could also become an electric brand within a larger automaker.
