Elon Musk successfully established Tesla Motors as one of the leaders in the electric vehicle industry 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 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)?Tesla Motors 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 will increase at a 31.5% compound annual growth over the next seven years (Navigant Research 2013). With Musk?s leadership and innovation Tesla plans on boosting sales by increasing current production of the Model 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 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 22450 while forecasts were set at 21500 (Ohnsman). All of this success has resulted in Tesla?s stock rising nearly $100 this past year (Yahoo Finance 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 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 cost 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 future for Tesla but if they are unable to effectively reduce 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 it?s only a matter of time before the supply becomes extremely scarce resulting in skyrocketing oil prices. This event should cause a major shift to the use of electric vehicles. The average consumer cannot afford the $90000 and up Model S but many are still interested in owning an electric vehicle. Musk realizes this 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 $35000 Tesla must 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 world?s current production (Trefis 20142). 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 Tesla?s business mainly the competition they face 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 new plug-in models aimed at affluent consumers (White 2013 1). Established luxury brands are muscling on to Tesla?s turf in part because government policies are forcing them to and in part because they see Mr. Musk peeling away influential trendsetters they don?t 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 Musk?s plan to increase production of the Model S while introducing two new vehicles by 2015 and 2017 the Model X and Gen III we should 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 Cited Alpert Bill. Recharge Now!? Forbes. 10 June 2013. Web. 16 October 2013. Electric Vehicle Market 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?? 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=tsla&ql=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.”
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