Tesla Charges Ahead
Quibbl asks what’s next for Elon Musk’s company and the electric vehicle movement
By Andrew Prescott Kingsbury with Ben Purcell
Since its founding in 2003, Tesla Motors has resuscitated the electric car and electric vehicle (EV) industry from life-support status and emerged as a legitimate competitor in the automotive industry. With Elon Musk at the helm and a newly-launched, mass-market vehicle (the Model 3) priced like a Toyota Corolla, Tesla’s established supply chain and international presence make it the undisputed leader in the industry. But just how far can the company go?
- More than a decade ago, Musk laid out his vision for “an electric car without compromises,” one that wasn’t limited, as previous incarnations of electric vehicles had been, in speed, style, range or efficiency.
- There were less than 100,000 electric vehicles worldwide in 2010. By the end of 2016 that number had increased to 2,000,000,
- Tesla Motors’ first vehicle was the Tesla Roadster, which was in production from 2008-2012. Musk followed that up with the phenomenally reviewed Model S in 2012, a high-end electric sedan in the same tier as a Mercedes S-Class or BMW 7-series. As the next phase of its publicly released “Master Plan,” Tesla delivered a high-end, all-electric crossover SUV called the “Model X”. The final vehicle in the “Master Plan” would be a mass-market vehicle unveiled for pre-ordering in 2016: Model 3.
- The company has accumulated more than 450,000 pre-orders of the Model 3, down from over 500,000 after a number of cancellations that Musk was quick to downplay.
- Tesla, with a market cap of $56 billion, is the most valuable automobile company in the United States.
When will Tesla Motors’ market cap rise above $70 billion? Quibbl here
- Tesla Motors has a huge advantage in that federal and several state governments offer hefty tax incentives and credits to spur EV purchases. The federal tax credit is $7,500 and accompanying state incentives can range from $500 rebates (New York) all the way up to a $5,000 tax credit (Colorado).
- Competition: There are other American electric vehicle companies that have sprouted up, such as Lucid and Fisker; in addition to companies that solely produce EVs, companies that primarily specialize in traditional ICE vehicles (Internal Combustion Engine) are also delving into the EV market with pure EV models and hybrid ICE/Electric models
The Road Ahead
- Tesla, along with many other companies, has rapidly been building charging stations. Currently, there aren’t enough charging stations to accommodate hundreds of thousands of electric vehicles. Range anxiety is a fear shared by many would-be electric vehicle purchasers, and a major challenge for the entire electric vehicle industry. Creating better, cheaper, high-capacity batteries is imperative for mass adoption of electric vehicles.
Will Tesla announce it is making an all-electric pickup truck by the end of September? Quibbl here
- Elon Musk has set a lofty goal of producing 5,000 vehicles per week by year’s end and a separate goal of doubling that production capacity to 10,000 per week in 2018.
Will Tesla accomplish its goal to produce 20,000 Model 3’s per month by December? Quibbl here
- Tesla Motors’ vehicles are the first in the world that are able to enhance performance and optimize themselves with software updates, just like your smartphone. They are also capable of fully autonomous driving (they can drive themselves).
What’s Not To Like?
- Not everyone is lauding Tesla’s success. Companies like GM, with their franchise dealership business model aren’t happy that Tesla is cutting out the middleman and selling directly to consumers from Tesla owned stores. There have been lawsuits and legislative efforts to prevent Tesla from being allowed to sell its cars in certain states.
- There is also controversy around the fact that electric vehicles have a government-sponsored advantage with taxpayer-funded subsidies. Some people are against the subsidies and believe the free market should decide, while others believe the subsidies are necessary as a preliminary crutch (many interested in the impact that electric vehicles could have on climate change and the environment are included among this group) to get the industry up and running.
Will either chamber of Congress introduce legislation to end federal electric vehicle tax credits by the end of October? Quibbl here
- From a financial perspective, stock market analyst Gene Munster believes Tesla is the next Apple. He asserts that Tesla’s Model 3 will revolutionize the automotive industry just like Apple’s first iPhone revamped the cell phone industry.
When will Tesla Motors’ stock price close above $400/share? Quibbl here
- Other analysts, although their opinion is a bit harder to come by, believe Tesla has bearish prospects and that the company will struggle to meet its monthly production quotas.
Will Tesla meet, beat or fall short of analysts’ 3rd quarter consensus earnings estimate of $2 lost per share? Quibbl here
What’s ahead for Tesla? For electric vehicles? For environmental policy? Quibbl about it all here.