Tesla Motors Essay Example for Free

Tesla Motors EssayElon Musk successfully established Tesla Motors as one of the leaders in the galvanisingal vehicle pains 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 self-propelled manufacturers. It markets 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 way to do so than with electric vehicles (Mora 2014, 1)? Through government support and raised capital, Musk has put Tesla in an advantageous position to capitalize on the growing electric vehicle market. Battery electric vehicles give increase at a 31.5% compound annual growth over the next seven years (Navigant Research 2013). With Musks leadership and innovation, Tesla plans on boosting gro ss revenue by increasing current production of the Model S, introducing the Model X SUV in 2015, and introducing the more afford equal to(p) Gen III by 2017 (Recharge Now, Forbes 2013).Tesla has now crept onto the spend ten list for brand perception, as ranked by Consumer Reports (Ingram 2013, 1). Tesla is exceeding their own expectations as more consumers are becoming 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 pay 2014). With people increasingly worrying about the harmful effects of combustion engines on the environment and the limited supply of oil, the market for electric cars has a long ton of potential.While there is tons of potential for Tesla, the truth is that they have yet to make an annual profit. Yes, they did raise their revenue from $413 million to $2 billion in the last year, but this still resulted in a net loss of $74 million (Yahoo Finance 2014). This loss is primarily due to the high make up of goods sold, which is why it is so important to keep researching and developing cheaper ways to produce their technology. Few expect to trim electric-car battery costs by more than 20%-30% by the planned 2016 (Recharge Now, Forbes 2013). Increasing sales indicates a positive futurefor Tesla, but if they are unable to effectively reduce the cost of goods their financial ensure 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 becomes extremely scarce, resulting in skyrocketing oil prices. This event should ca hire a major shift to the use of electric vehicles. The average consumer cannot afford the $90,000 and up Model S, but many are still interested in owning an electric vehicle. Musk realizes this opportunity and has begun dev eloping a more affordable model known as the Gen III. In order to launch this model at a price point of around $35,000 Tesla essential drastically reduce the cost of batteries. Tesla unveiled details about a plan to build a gigafactory. 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 worlds 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 search in the alternative fuel vehicle market. Many established and upcoming automobile manufacturers have entered, or plan on entering this market. For example, BMW, Cadillac, Porsche, and Audi are promoting fresh plug-in models aimed at affluent consumers (White 2013, 1). Established luxury brands are muscling on to Teslas turf in part because government policies are forcing them to, and in part because they see Mr. Musk desquamation 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 grocery Forecasts. Navigant Research. Navigant Consulting Inc, 2014. Web. 13 Mar. 2014. Ingra, Antony. Tesla Gains In Brand Awareness. Green Car Reports. High Gear Media, 4 Feb. 2013. Web. 13 Mar. 2014. Mora, Victor. Is Tesla Motors an Attractive Investment? protect St. ramble 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 exit 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.