In Musk We Must Trust

Tesla has finally unveiled its standard range of Model 3 sedan for $35,000- jumping to the next step of its master plan to boost its revenues.

Though the company is incredibly excited about its latest achievement, the investors have their own reasons to be concerned. They fear that launching its next range of affordable cars may make the company lose its exclusivity.

Tesla CEO Elon Musk has recently announced in a conference on Feb 27th that Tesla’s latest affordable Standard Model 3 will have 220 miles of range, a top speed of 130 mph and it will accelerate from 0 to 60 miles per hour in 5.6 seconds. Tesla is also offering higher performance, long-range version of Tesla, Standard Range Plus, for which you will have to pay $2000 more. “For 6% more money, you get 9% more range, more power, and an upgraded interior”, said Tesla in a blog post. Musk also said that Tesla will be shutting down more of its stores in the coming months and laying off most of the workers in order to make it financially capable to manufacture its latest range of cars. That means all Tesla purchases will be done online.

Due to Tesla’s new purchase policy, the company claims that it will make returning cars easier for customers. Buyers will have seven days or 1000 miles during which they can return their newly purchased cars if need be.  At the same time, Tesla is trying to improve what may be considered as the most criticized aspect of its car ownership experience- the servicing of cars. The company will be providing the same-day service to its customers, and they will send their executives to customers’ homes rather than have customers come to their service centers to get their cars serviced. Contrary to his previous statements in which he promised to the investors that Tesla would start generating revenue from now on, Musk said Tesla might not be producing profits in the first quarter of 2019, but it could be in the profit from the second quarter.

Tesla’s Main Challenge

Tesla has single-handedly made us fall in love with its exotic range of electric cars, be it its S3XY series or Tesla Roadster, and got the rest of the industry to sit back and take notice. But no matter how much luxurious cars it manufactures or gains popularity, the real future of the company lies in producing cars for the masses. That’s gotta be Model 3, but so far Tesla has struggled to meet its production requirements. Tesla’s biggest challenge going forward will be meeting production demands while maintaining timely service for a rapidly expanding customer base. If Tesla is able to do this, it will turn into a mainstream brand serving mainstream customers. As Musk tweeted, Tesla will start rolling out Model 3 in the Chinese market in approximately 6 to 8 months, since the production commenced in its newly inaugurated Shanghai-based Gigafactory 3. Since 2018 was the year of “production hell” for the Tesla makers, Musk is being careful with the production of Model 3 in 2019.

Who will Tesla be competing with:

Much of Tesla’s competition this year will not come from the most familiar names in the concept car industry. Audi has gradually been rolling out its E-Tron SUV, Jaguar is having similar engagements with I-Pace, Mercedez-Benz is reportedly delaying the first deliveries of its electric SUV, EQC. But Tesla’s biggest threat this year doesn’t come from these 3 companies, but from China’s own largest automakers, like BAIC, which makes small electric cars which are far more affordable than Tesla’s range of premium cars. Like, Chinese EV startup, NIO sold 11,000 units last year in the first few months of its production. These Chinese startups surely know how to lure their customers, by imitating the “Tesla-style” experience and selling cars in sleek stores. Tesla needs to get its Shanghai’s Gigafactory up & running because a stiff competition awaits it, and as it plans to reveal the Model Y crossover SUV later this year, most probably in China, other big players like Volkswagen and Porsche are planning to come into the big picture too.

Will Tesla ever come to India?

Musk has recently teased in one of his tweets for a potential entry into the Indian market. If the billionaire does ever bring his renewable-energy vision to India, he may want to lead with battery-based energy-storage solutions for grid rather than electric cars. India’s power market, on the other hand, is becoming the next big thing. The country’s fight against crippling pollution and the pressing need for clean power has reenergized the power sector. Globally, India ranks fifth in terms of total renewable-energy installed capacity, behind China, UK, Germany, and the US, according to Bloomberg New Energy Finance. With a population of 1.3 billion people, India is projected to overtake China as the largest growth market for renewable energy by 2020. 

India is easily the largest market opportunity for energy-specific MNCs, but the main problem the nation is facing in this arena right now is that of storage. There is a huge gap between renewable energy production solutions and available energy storage. In the absence of large-scale and efficient energy storage solutions, much of the energy produced from solar farms and wind turbines is wasted. While this wasted energy can be utilized by transporting it to the nearest grid to meeting peak energy demands or be transported to parts of the country prone to power outages, as well as to millions of houses lacking grid connections. But due to poor implementation practices, India has failed terribly in creating a technologically advanced renewable energy utilization strategy. Ultimately, the energy-storage gap will create enormous opportunities for companies like- Tesla, LG Chemicals, BYD, Daimler’s Mercedes-Benz Energy, which rely heavily on renewable energy sources. As Tesla is sharply focussed in expanding its electric car business, and much of its battery storage production is geared towards fulfilling that objective, we can see Tesla coming to India in the near future, and setting up an auto factory.

The Tesla Motors Masterplan

Very few people know that back in 2006, when Twitter was just 4 months old, and when Musk used to blog more than a tweet, he wrote a blog post named “Between you and me”. Here’s how he laid down his vision for the company in the coming years:-

“My day job is running a space transportation company called SpaceX, but on the side I am the chairman of Tesla Motors and help formulate the business and product strategy with Martin and the rest of the team. I have also been Tesla Motor’s primary funding source from when the company was just three people and a business plan.”

As you know, the initial product of Tesla Motors is a high performance electric sports car called the Tesla Roadster. However, some readers may not be aware of the fact that our long term plan is to build a wide range of models, including affordably priced family cars. This is because the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.”

At the end of the post, he summarizes the ‘master plan’:-

  • Build Sports Cars.
  • Use that money to build an affordable car.
  • Use that money to build an even more affordable car
  • While doing above, also provide zero emission electric power generation options.

He humorously ended his post with “Don’t tell anyone”.

No one would have thought at that time that the company would indeed eventually deliver an all-electric, family-seater Sedan with 220 miles range, a sports car that reaches 100 kmph in 3 seconds, and a charging network spanning across much of the US. Musk’s only problem is money. Investors aren’t trusting him, except some of them still do. Musk is a Visionary Man; he remained committed to his vision despite facing problems. No one can run Tesla better than the Elon Musk, that’s for sure.

Allow him some smoke, cut him some slack, give him some funding, and this dude will prove you his worth!

For it’s still not done for Musk…

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