Is Tesla up for this challenge

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Abhishek Jain,  MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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Once associated with comprising power, Tesla has completely changed the perception of Electric cars. Last week when Tesla revealed it’s Model 3. The hysteria of the car can be estimated by 1 lakh plus reservation on that single day which jumped to 4 lakhs in the subsequent week. This number was almost four times the total number of cars Tesla manufactured in the last 8 years.

This unveiling is seen as one of the most important event 100-year history of the mass-market automobile. It will be now very interesting to see if Tesla can make long range car with the same power of Model S, at a reasonable price. Typically battery is the most expensive part of an electric car, which accounts for about one-third of the total cost. Tesla has worked very on this aspect, and in fact, they eventually came with the biggest battery factory in the world and a standalone battery storage business. For taking the gross profit margins to 20 percent Tesla would have to still cut thirty percent of their battery cost. Tesla is even working on shelving out more mile with the same amount of electricity. In a recent twitter post, Musk even claimed that Model 3 will be the sleekest car ever sold with a drag coefficient of 0.21.

In the coming time the biggest problem these would face is the availability of the gas stations (currently only 13 such stations are available). The current run provided by model 3 is 215 Miles which makes it perfect for an intercity drive. Another issue where Tesla is working is the speed with which these chargers charge the cars. Tesla Superchargers can provide 170 miles of driving range in 30 minutes; owners of the Model X and S can use them all without charge.

Everything looks fine for Tesla to expect the fact they will have to manufacture all these cars on time. Tesla is known for delaying its project, they have already deposited $1000 for every reservation of 4 lakhs cars. It would be very interesting to see how Tesla would respond to this challenge.

References

  1. http://www.livemint.com/Companies/keM9ifuHQTKhTNhlWsSUeI/Tesla-changed-cars-forever-Now-it-must-deliver.html
  2. http://www.theverge.com/2016/4/21/11477034/tesla-model-3-preorders-400000-elon-musk

 

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