Tesla Motors is an American electric automotive car manufacturer that was formed in 2003. The company currently sells the high tech, high performance, luxury sports car the “Roadster”, which sells for over $100,000. Tesla will be releasing its new “Model S” sedan later this year, which sells at a more attractive $50,000 to $60,000 range. According to an article in Just-Auto, the future success of the company is heavily reliant on the success of the Model S, as the company is currently only receiving revenue from the sale of batteries to two of its investors. The company went public in 2010, and quickly had stock market success. But as of April 2011, the stock fell ...view middle of the document...
This alliance aids Toyota by revealing their commitment to advancing technologies to the public. Tesla is benefiting because they are currently using Toyota’s factory, NUMMI, to manufacture cars. And lastly, Panasonic and Tesla are partnering to benefit from each other’s battery expertise.
Secondly, Tesla is unique in its product and business model. Tesla has created an image to be known as innovative, high tech, and luxurious. The fact that there are only select locations to purchase their vehicles makes them unique, and provides customers with superior customer service.
And finally, society is placing value on transportation alternatives that do not rely on costly oil. With oil prices continuing to rise because of problems in the Middle East, Americans are looking positively on electric cars. Results of a poll in the United States revealed that 72% of Americans have either bought or would like to buy an electric vehicle. The case also stated that forecasts speculate that electric cars will account for 7% of vehicles in America by 2020 and as much as 15% by 2025
Tesla’s biggest concern is its lack of liquidity. The company has yet to see a profit, and is in a mountain of debt. As of June 2010, the company had lost over $400 million. According to an article from Business Insider, “The United States Department of Energy (DOE) loaned Tesla $465 million…This loan has several restrictions that are structured around the progress of the Model S...Tesla stands to lose revenue if the Model S delays, since the DOE loan pays in installments as the Model S reaches various development and production benchmarks. Management even said that if it can’t access the DOE loan in its entirety for any reason, then it’ll have to issue more equity or debt, diluting the stock price and increasing company risk”. Because of the company’s huge amount of debt and the slow rate at which consumers are buying Tesla cars, it does not seem likely that the company will see profits anytime soon.
Another weakness is the company’s limited options for customers to purchase vehicles. Because customers can only purchase cars at a few locations or online, it does not seem like the company’s sales will increase much. According to the Business Insider article, Tesla hopes to sell 20,000 Model S’s. If this is the case, the limited...