Tesla Motors Essay Example for Free

Tesla Motors EssayElon Musk successfully established Tesla Motors as one of the leaders in the electric vehicle fabrication since his induction as CEO in 2008. Tesla Motors designs, manufactures, and sells electric cars and powertrain components. The company also provides services for the development of powertrain systems and components, and sells electric powertrain components to other automotive manufacturers. It grocery stores and sells its vehicles through Tesla stores as well as over the internet (Mora 2014, 1). Consumers and companies are looking to save at the pump, and what better steering to do so than with electric vehicles (Mora 2014, 1)? Through government support and raised capital, Musk has put Tesla in an discriminatory position to capitalize on the growing electric vehicle market. Battery electric vehicles will subjoin at a 31.5% compound annual development over the next seven years (Navigant explore 2013). With Musks leadership and innovation, Tesla plans on boosting sales by increasing current production of the deterrent example S, introducing the Model X SUV in 2015, and introducing the more affordable Gen III by 2017 (Recharge Now, Forbes 2013).Tesla has now crept onto the top ten reheel for brand perception, as ranked by Consumer Reports (Ingram 2013, 1). Tesla is exceeding their own expectations as more consumers are graceful familiar with their company. In 2013, sales totaled to 22,450, while forecasts were set at 21,500 (Ohnsman). All of this success has resulted in Teslas stock rising nearly $100 this past year (Yahoo Finance 2014). With people more and more worrying about the harmful effects of combustion engines on the environment and the limited supply of oil, the market for electric cars has a ton of potential.While there is tons of potential for Tesla, the truth is that they have in time to make an annual profit. Yes, they did raise their revenue from $413 million to $2 billion in the last year, alone this still r esulted in a net loss of $74 million (Yahoo Finance 2014). This loss is mainly due to the high cost of goods sold, which is why it is so important to keep researching and developing cheaper ways to realize their technology. Few expect to trim electric-car electric battery cost by more than 20%-30% by the intend 2016 (Recharge Now, Forbes 2013). Increasing sales indicates a positive futurefor Tesla, but if they are unable to effectively expurgate the cost of goods their financial condition will suffer.Next, we will examine the opportunities that Tesla could capitalize on with their substantial growth over the past few years. Being that oil is a limited resource, its only a matter of time before the supply functions extremely scarce, resulting in skyrocketing oil worths. This event should cause a major shift to the use of electric vehicles. The average consumer cannot afford the $90,000 and up Model S, but some are still interested in owning an electric vehicle. Musk realizes th is opportunity and has begun developing a more affordable model known as the Gen III. In order to launch this model at a price point of around $35,000 Tesla must drastically reduce the cost of batteries. Tesla unveiled details about a plan to build a giga mill. It will cost them $5 billion, but it will reduce battery costs by an impressive 30% in the first year (Trefis 2014, 1). At peak production, this factory will be able to produce 50 gigawatt-hours of batteries in a year, more than the entire publics current production (Trefis 2014,2). At this point, Tesla could provide surplus batteries to the electronic industry and potentially become a leading producer of energy storage.Despite all of this, there are potential threats to Teslas business, mainly the competition they face in the alternative fuel vehicle market. Many established and approaching automobile manufacturers have entered, or plan on entering this market. For example, BMW, Cadillac, Porsche, and Audi are promoting yo uthful plug-in models aimed at crocked consumers (White 2013, 1). Established prodigality brands are muscling on to Teslas turf in part because government policies are forcing them to, and in part because they see Mr. Musk peeling away influential trendsetters they dont want to lose (White 2013, 2). The impact of these new luxury plug-ins on Tesla will depend on whether they are trying to expand the segment, or merely go after the same consumers.With Elon Musks plan to increase production of the Model S, while introducing two new vehicles by 2015 and 2017, the Model X and Gen III, weshould expect to see continued success from Tesla Motors. If Musk successfully reduces operational costs and offers consumers an affordable Tesla model, he may trigger an amazing turning point in the auto industry and leave a lasting impression on the world.Works CitedAlpert, Bill. Recharge Now Forbes. 10 June 2013. Web. 16 October 2013. Electric Vehicle Market Forecasts. Navigant Research. Navigant Co nsulting Inc, 2014. Web. 13 Mar. 2014. Ingra, Antony. Tesla Gains In Brand Awareness. Green Car Reports. High monger Media, 4 Feb. 2013. Web. 13 Mar. 2014. Mora, Victor. Is Tesla Motors an Attractive Investment? Wall St. Cheat Sheet. Wall St Cheat Sheet, 21 Jan. 2014. Web. 13 Mar. 2014. Ohnsman, Alan. Tesla Rises After Model S Sales in 2013 Exceed Forecast. Bloomberg.com. Bloomberg, 15 Jan. 2014. Web. 13 Mar. 2014. Tesla Motors Inc. (TSLA). Yahoo Finance. Web. 13 March 2014. http//finance.yahoo.com/q?s=tslaql=1. Trefis. Gigafactory Will Cost Tesla $5 Billion But Offers Significant Cost Reductions. Forbes. Forbes Magazine, 11 Mar. 2014. Web. 13 Mar. 2014. White, Joseph B. BMW, Cadillac Aim to Pull Plug on Tesla With Pricey New Cars. The Wall Street Journal. Dow Jones Company, 20 Nov. 2013. Web. 13 Mar. 2014.