An Exciting Year Ahead For Tesla Motors

by Trefis Team
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Tesla Motors (NYSE:TSLA), the Silicon Valley based automaker renowned for making uber-cool electric cars, is in a crucial stage of its growth as it starts off the new year. The automaker unveiled the much-awaited Model X at the Detroit Auto Show. Model X is a luxury crossover, the sales of which will begin in 2014. Besides the Model S and Model X, the automaker is also working on a building a lower priced, high volume model (known as Gen III). The car will cost $30,000 onward after tax credits.

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Tesla recently turned cash flow positive and the company’s CEO Elon Musk intends to make the company profitable for the first time in the final quarter of 2013. [1]  Here are some of the things to watch out for in the current year.

a) Model S Ramp Up

Tesla has finally hit the intended goal of a production of 20,000 units annually, and the company aims to sell every car it produces this year. The initial response to the Model S has been tremendous with the company already having received 13,000 orders for the car globally.

However, the car will also face increased competition from new entrants looking to grab a share of the luxury electric segment. Both BMW’s i3 and Cadillac’s ELR have garnered considerable excitement at their respective debuts. BMW showcased its i3 at the previous year’s Los Angeles auto show while GM debuted the new ELR at the Detroit Auto Show [2]

b) Superchargers

In September 2012, Tesla also announced its plans to establish a network of Supercharger electric car recharging stations across the country in the next 3-4 years. [3] It has already set up a number of stations in California and along East Coast in the hopes to add another 100 by 2015. The charging stations convert solar energy to electricity and allow Tesla customers to charge their cars for free.

Setting up Superchargers is a wonderful idea if executed properly. It reduces any distance related anxiety (which is pretty common for electric cars), lowers the running cost of the vehicle and creates a goodwill which certainly helps retain the existing customers.

c) International Expansion:

In December, the company also opened a new assembling plant in Netherlands as its first foray into the European electric car market. The pricing of the Model S in Europe has also been announced thereafter. Since Tesla will assemble its vehicles locally in Europe, it will be able to circumvent the import tariffs. Besides Europe, the automaker also opened its first retail outlet in Canada in November. [4] Building a strong network internationally will be critical as it looks to expand its product portfolio in the coming years.

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Notes:
  1. Tesla CEO Elon Musk says automaker aims for profit in 2013, January 14, 2013, mercurynews.com []
  2. Cadillac’s New ELR Is Ready To Battle Tesla For The Luxury Electric Car Market, January 16, 2013, businessinsider.com []
  3. Tesla Motors opens first East Coast Supercharger stations, December 31, 2012, digitaltrends.com []
  4. TESLA MOTORS OPENS FIRST CANADIAN STORE, November 16, 2012, teslamotors.com []
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