Tesla Motors: Taking a Look at Recent Developments
The popularity of Tesla Motors (TSLA) is growing. Tesla is an advanced player in electric vehicle technology when compared to other players in the industry, whether new or old. Its Model S is mentioned in many reports as the iPhone equivalent of automobile industry. Thus, it has become a benchmark which every new entrant has to match before even dreaming of being recognized as an acceptable model by the potential customers or industry experts.
Tesla leads the way
August 2015 EV sales figures for the U.S. will be shortly reported, but will not change the rankings too much, especially among the top 4 positions.
The reasons behind Tesla's rapid growth in the EV industry are many. However, there is only one basic difference in the DNA of the Model S and the other players that are trying to make a dent in the industry. Model S's parent company is originally a pure electric vehicle technology-based company, while the others are originally traditional manufacturers focused on internal combustion engines that are now looking to make a dent in the EV industry.
But, even Tesla is having a difficult time in taking its next big step toward powering its growth to new levels. Its Model X has been delayed for long. It has been quite a distraction too, which has caused some delivery exhaustion in June affecting the quarterly sales of Model S. There has been some plant reconfiguration work done by Tesla and some RHD production work going on at the company's facility of late which made the bulk of the North America-bound Model S sedans sold in July to get scheduled/delivered quite late in the month.
All in all, Tesla has invested $359 million during the last quarter, mostly toward capacity expansion at the Fremont plant. This was done to ramp up the manufacturing of the Model X, apart from the construction of the Gigafactory in Nevada. Batteries are another line of business that Tesla is focusing on these days. It is really developing everything that the EV industry would comprise of: EVs, superchargers, batteries etc. Without any marketing or advertising, Tesla has received over 100,000 reservations for of its batteries, worth more than $1 billion.
Tesla is also experimenting with certain innovative sales & marketing initiatives. Currently, it is running a customer referral program that will help inform where and how many stores the car company should build. It has also generated $ 20 million of revenue from the resale of trade-in vehicles through the launch of a pre-owned vehicle program last quarter.
Thus, Tesla Motors is making moves to ramp up its capacity, which will allow the company to gradually improve its sales in the long run. Hence, I think Tesla Motors looks like a good investment from a long-term point of view given its smart moves to tap the end market.