Blog: Dave LeggettTesla's big challenge

Dave Leggett | 2 July 2010

Model S Maserati-esque styling is easy on the eye

Model S Maserati-esque styling is easy on the eye

Tesla Motors' IPO may have been successful but the company is losing money hand over fist. As my colleague Graeme Roberts notes, a financial train wreck is a distinct possibility if the Model S is not successful. And some bigger industry players are sure to be watching in the wings, acquisitive antennae firmly tuned in.

A boutique electric roadster is one thing – and, let's be fair, it is a big achievement; the company must have learned a lot about manufacturing, dealing with suppliers and so on, in a very short space of time (Martin Eberhard's less than happy departure suggests that cost/time pressures inside the company have been considerable). But a higher volume 4-door luxury sedan (not contracted out to Lotus for assembly) is something else and will stretch resources and capabilities even further.

The Model S will be built on a flexible platform that the firm hopes will support several body derivatives and production capacity is planned at 20,000 per annum, with a further 10,000 units of capacity available if needed. But the big question is (assuming they can actually deliver on the manufacturing side): will the customers bite at USD50,000 a pop for the Model S?

If they do, the next stage of the project will be a much higher volume model - think USD30,000 retail and building up to more like 100,000 units per annum. I'd expect that Tesla would have been absorbed by a bigger group by then, founder Elon Musk happy enough to bow out having succeeded in his aim to bring performance/luxury electric cars to the market. He can let someone else pick up the reins and push the brand into higher volume territory (while also straightening out his personal balance sheet).

A sidenote....

The firm is certainly sounding upbeat about the manufacturing set-up for the Model S. The below link is to a page on Tesla's website. Sounds like they are looking at the quick battery swap idea for the Model S: '...With this engineering feat, you'll be able to quickly swap an empty battery for a full one, should the need arise on long road trips.'

The Tesla Factory: Birthplace of the Model S


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