Student Name and id:
Ramandeep Kaur (c0731920)
Simranjeet Kaur (c0727100)
Bableen Kaur (c0727191)
Shingarjeet Singh (c0731902)
In 2003, Elon Musk found Tesla motors that is a global enterprise specializing in the design, production, and marketing of electric vehicles. Elon surprise the world with his extraordinary vision of Tesla Motors. Tesla Motors is only company sell zero emission cars. Tesla’s main motive and selling point is manufacturing only electric vehicles, as opposed to other companies, producing a combination hybrid, or gas powered car.
Tesla is unique company because it competes the company like Ford, Toyota which are popular for their combination cars but their cars cannot be considered as true EV cars because of their dependence on fuel. On the top of that, Tesla Model S use 50% of energy of Toyota Prius per mile but get double range. Tesla is far ahead of game by concentrating on their electric vehicles.
We know that now the most people use diesel cars but we also know that the petrol and diesel can be finish in future. So, the electric cars like Tesla will be the future of cars and it is also proving that by showing its advantages and growth which it has shown in last five years. And by giving nice deals on the cars and using different strategies, it is winning hearts of people.
Challenges faced by Tesla
? Challenge #1: Battery problem due to the price of Lithium.
We know that life of Tesla electric cars depends on battery and its expenditure on massive battery factory is about billions of dollars. However, it is not the complete solution of this problem.
? “If they succeeded in producing 500,000 cars (which is a big ‘if’) — up from 35,000 — they will have to double the amount of lithium ion batteries produced, and will have to double the amount of lithium mined out of the ground,” Bedigian, L. (2014, March 7).
? “Lithium isn’t silicon. Silicon is sand. Lithium is a complicated thing. There’s a finite amount of it. I can’t believe that the price of lithium will not respond to massive demand shock like we’re talking about here. The United States went from putting zero percent of our corn crop into fuel to 30 percent and it tripled the price of corn. I think the price of lithium could triple or quadruple, and it’s the key component. Plus, nearly half the world’s supply of lithium is in Bolivia, whose president wants to create an OPEC out of the supply of lithium.” Thompson told.
From this study, we can conclude that Tesla has to find some other way to solve its battery problem in order to improve their sales.
? Challenge #2: Competition with other automakers
Due to the other big companies like Honda, Toyota etc. Tesla is facing challenges due to rise in the competition because they are delivering the product which the people want. May be the people find it a bit difficult to accept the electric cars.
? Thompson said that even if the former issue isn’t a problem, Tesla still has to deal with the reality that it will not dominate electric car sales forever.
? “Who is to say that Tesla is the only electric car company that’s ever going to have a product people want?” Thompson questioned. “You’ve got some of the biggest, best capitalized companies in the world between Honda and Toyota and Nissan and Ford and GM and Chrysler and Fiat and BMW and Mercedes, all trying to get into the business.”
So, I come to the point that Tesla has to make his place in people’ heart as like the diesel cars did. Only by becoming the product which people want, it can cope up with the competition.
? Challenge #3: Expensiveness: $30,000 is Not “Mass-Market”
Tesla is facing challenges due to its cost also. Tesla motors thinks that a vehicle with in the range of $30,000 to $ 40,000 is affordable and a mass market vehicle. However, it is still a very costly vehicle
? “Mass-market is a $21,000 Honda Accord LX,” said Thompson. “The average man needs that car not just to go to work and back, but they also got to drive it to Traverse City, Michigan on vacation. Then their kids want to go down to Florida once in a while or go camping in the Upper Peninsula or whatever. You can’t do that with a car that you’ve got to charge for four hours…every 200 miles”.
So, we can say that its expensiveness is a barrier in its way to success. By get rid of its expensiveness, Tesla can enhance its sale.
Tesla’s growth in last decade
Tesla show a fast pace in its growth in the last ten years. Its growth story from start point to sales of billions is tremendous which we can see in following statistics.
(Tesla, Inc. Price | Tesla, Inc. Quote)
From the graph, we can observe that in 2008, the Tesla made just $14.7 million in total and it shows little growth in the following four years. Tesla growth story began in 2012 in which they delivered 2650 S models, which made the full year sales to $413 million. The next year Tesla reporting total revenues of $2.01 billion by selling 6892 s models. After that Tesla sales climbed by roughly $1 billion over next two years and the sales reached to $4.05 in 2015 and then $7 billion in 2016. Last year, more than 100,000 Model S sedans and model X SUVs are sold which make it total revenue to $11.76 billion.
From this graph, we can conclude that Tesla just starts from 14.7 million in 2008 but as by passing the time, it just hit the peak to $ 11.76 billion in last year. However, it sales face some decrement in last year, which we can clearly see in the graph. But in complete the Tesla led to major run of success.
Reason behind Tesla is Future of cars
We can predict that Tesla can be the future of cars from two major points that are the strategies which Tesla Motors is using or will be use in future and the benefits of electric vehicles.
1. Advantages of Electric Cars:
No doubt that electric cars giving us the number of advantages which the people are now recognizing and are very important in aspect of growth of Tesla company as their major production is electric vehicles.
NO Gas Required: We know that EV cars does not need any kind of gas to run as it works on electricity. The persons who owned fueled cars have to spend a lot of money as fuel price are increasing day by day. A study showed that an average American spends $2000- $4000 on gas each year. So electric cars are much cheaper than diesel cars
No Emissions: We know that car run on diesel or fuel emit toxic gases and smoke which is not good for environment. On the other hand, the EV cars are ecofriendly as they run on electricity. So, by owing electric cars we can contribute in healthy and green climate.
Safe to Drive: Electric cars has to go through some fitness and testing procedures test as other fuel powered cars. In case of an accident, one can expect airbags to open and electricity supply to cut from battery. This can prevent you and other passengers in the car from serious injuries.
Low Maintenance: Electric cars has less moving parts as the fuel or diesel cars and we also do not need to lubricate the engines in EV cars. So, we do not need to send service station as we did with fuel cars. So, it does not need to spend too much on its maintenance.
Many people think that due to the advantages of Tesla cars and due to their growth in the last decade, the Tesla stock is buying Confidence in future. Apart from these their strategies are also playing a vital role in this.
According to Ali Raza “Tesla has come a long way since convincing the public that an electric car is a feasible, convenient, and cost-efficient mode of daily transportation. Since then, Tesla has delivered more than 70,000 electric cars and recently expanded its scope to solar power batteries for homes. “(2017)
The next step for Tesla is transforming the brand from a luxury car to an affordable mode of transportation. The Model 3, set to be released in March, will be the least expensive Tesla with a $35,000 price tag.
The next step that Tesla has taken to increase their production is The Model 3 that set to be released in March with the cost of $35,000, because of its cost it become the least expensive Tesla car
Tesla is also working on giving people the offer of free at home charging and make charging stations in residential buildings because most families live in apartments. Tesla has taken this step because people find it difficult that how to charge the cars. This is also the reason that in 2015, Tesla sales lagged behind in China.
The other strategies of Tesla are its launching of Powerwall by which it shows its customer that it is more than a car company but it is energy innovation too.
By taking into account, all above mentioned points like in spite of facing serious challenges, the tremendous growth which Tesla has make in the last decade in which it just starts from approximately 14 million dollar and reached to about 119 billion dollars last year along with that the strategies which is TESLA using to win the heart of people by making them aware about the advantages of electric cars and by get rid of its challenges and obstacles which are the barriers in the path of its success, Tesla give a tough fight to other big automakers like Toyota. And if it grows in this pace, definitely it will be the car of every person in future.
2. Benzinga, T. (2014, March 7). Price of Lithium is Likely to Skyrocket. Retrieved from https://www.benzinga.com/trading-ideas/short-ideas/14/03/4374622/the-3-biggest-challenges-facing-teslas-future-growth
3. Three biggest challenges faced by Tesla. (n.d.). Retrieved from http://bwdisrupt.businessworld.in/article/Three-Biggest-Challenges-That-Tesla-is-Now-Facing-/10-06-2017-119867/
4. Tesla Motors revenues and revenue growth. (n.d.). Retrieved from https://finance.yahoo.com/news/look-tesla-apos-tsla-revenue-155203507.html
5. Future of Tesla. (n.d.). Retrieved from https://www.investopedia.com/stock-analysis/060815/future-tesla-tsla.aspx