Tesla’s future is looking brighter than ever after an 80% surge in the company’s stock this year has made it the second-most valuable automaker in the world. But now the company needs to rapidly expand its vehicle lineup to live up to the financial hype.
The stock increase, placing Tesla behind only Toyota in market value, has baffled some skeptical analysts while giving others evidence that their long-held beliefs in Tesla’s potential could come true.
What’s clear is that for Tesla to live up to the hype, the company will need to quickly expand its roster — which currently comprises a luxury sedan and SUV and “lower-end” sedan that can top $50,000 — into a wide assortment of options, including potentially a mainstream car or SUV, with high-tech features and ample profits. Most major automakers sell several times as many vehicle models as Tesla, including body styles the company does not currently offer, such as pickups and large SUVs. Most offer a much wider range in price.
“They are going to broaden the lineup,” said Jessica Caldwell, executive director of industry analysis at car-research site Edmunds.
As of Friday morning, Tesla’s shares were trading in the range of $740, up from about $460 a month earlier and up from about $335 a month before that.
For a long time, Tesla CEO Elon Musk promised that the company’s Model 3 compact car would be an affordable option. While the vehicle has been a hit, analysts say most buyers pay close to $50,000, well above January’s average vehicle price of more than $37,600, according to Edmunds. Technically the Model 3 starts at $39,990, but that comes with shorter battery range and fewer premium interior features than the souped-up versions.
But don’t expect it anytime in the next few years. Tesla’s current focus is on ramping up assembly of the forthcoming Model Y SUV and increasing production of the Model 3.
Yet Tesla will need to develop an affordable car to compete with the likes of Volkswagen, General Motors, Ford and Toyota as they come out with their own options.
“They’re gigantic companies with just unbelievable reach and the ability to just crank up EV production at scale in the future that I don’t think Tesla can really match,” said Brian Moody, executive editor of car-shopping site Autotrader.
Is that Cybertruck for real?
When Musk debuted the Cybertruck in November, automotive industry observers were gobsmacked at the unconventionally futuristic, stainless-steel body design. Is Tesla actually serious about making this vehicle?
It certainly appears so.
With a battery range of at least 400 km, a towing capacity of more than 3400 kg and a 0-to-100-km/h time of fewer than 6.5 seconds, the Cybertruck carries a starting price of $39,900.
Since Tesla began accepting $100 refundable deposits on the vehicle in November, “the demand has been incredible,” Musk said on a conference call Jan. 29. “We’ve never seen anything like it, basically. I think we will make about as many as we can sell for many years.”
He said in November that the vehicle would arrive in about two years.
What about another Roadster?
It’s coming. But it’s probably delayed.
Calling it the fastest car in the world, Musk said in November 2017 that the automaker’s new Roadster would arrive in 2020. The company, whose first car was a since-discontinued version of the Roadster based on a Lotus platform, has been accepting reservations on the new, advanced Roadster. But it no longer appears that the vehicle will arrive this year.
On the January conference call, Musk mentioned the “next-gen Roadster” as a priority but grouped it with other products that are coming in “the next couple of years.”
One thing’s for sure: The Roadster will make a grand entrance when it arrives, with a top speed of more than 400 km/h, 0-to-100 km/h time of 1.9 seconds and a battery range of 992 km.
How about another SUV?
It’s imminent. Tesla started manufacturing the Model Y SUV in January, several months ahead of schedule. The vehicle is based on the same architecture as the Model 3 compact car, but it’s got more space, including an optional third row.
With prices starting at $52,990 for now, the Model Y qualifies as a luxury vehicle that should compete with the likes of BMW, Audi, Mercedes-Benz, and Lexus. But it’s not in the ultra-luxury range like the Tesla Model S sedan and Model X SUV, both of which can easily top $100,000.
Musk has predicted that the Model Y will outsell the S, X and 3 combined. Given the nation’s obsession with SUVs, which now represent about half of the vehicle sales, he could be right.
Don't some models need a redesign?
Yes, and Tesla might have to do something about it. The Model S arrived in 2012 and the Model X in 2015. Most major automakers redesign their core vehicles every five years or so.
Musk has maintained that Tesla does not view its vehicles as aging in the same way that traditional vehicles age. The company’s cars can be updated via wireless software upgrades, which is still not possible on most mainstream vehicles.
But the body styles can’t be changed without new design and engineering, which costs money and time, something that Tesla may not be able to expend for now, given its other priorities.
“There’s coming a day when those vehicles – the Model S, the Model X and the eventually the Model 3 – will need to be redesigned,” Moody said.
Why aren't more Teslas being built?
Lack of battery production. This is one of the main reasons Tesla sold only about one-thirtieth of the vehicles as the most-valuable Toyota in 2019. In a perfect world, Tesla would be able to build more plants and assemble more vehicles with ease. But electric vehicles require battery components that remain difficult to manufacture in large quantities.
“The thing we’re going to be really focused on is increasing the battery production capacity because that’s very fundamental,” Musk said.
Insufficient battery production at the company’s plant in Nevada is “probably the reason why we have not, for example, really accelerated production” of the announced Tesla electric semi-truck, Musk said, noting it uses a lot of batteries. “This is very fundamental and extremely difficult.”
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