Thursday, February 2, 2017

A Big Move for Tesla Motors

           Tesla Motors has been an interesting company to watch grow over the past few years. From the introduction of the Model S to the newer roadster and SUV models, the Palo Alto company has been the source of incredible innovation. Elon Musk has been a stalwart leader all throughout. Still, the growth of Tesla Motors has not come without its bumps in the road. Until recently the company has never reported a profit. They just now have. Despite what is considered poor fundamentals, the company’s stock has done extremely well. Tesla’s cars are wonderful. Even so, there is a primary drawback, the cars are tethered to the range of a single battery charge and charging stations that are scarcely available. Developing a car that has an unlimited range should be a primary goal for Tesla Motors. Could the company be looking to do exactly this with its recent acquisition of SolarCity, a solar panel manufacturer? It could be a huge breakthrough.
            Tesla’s most recognized car, the Model S, has an operating range of 208 to 315 miles on a single battery charge. This is fine for short trips. Transportation to work and back with a short road trip on the weekends are all the advanced batteries can muster at the moment. Longer use is basically impossible without extreme planning. Your route would have to be planned based on the location of the few public charging stations that are available. Things would be entirely different if the car could charge itself. Two major points highlighted in this Bloomberg article suggest that the electric car company could be planning exactly this. The company recently acquired SolarCity a solar panel manufacturing company. With its acquisition, Tesla acquires a wealth of solar panel manufacturing capital. Machinery, designs, personnel, experience and technology to name a few. This valuable solar capital could be used to integrate solar charging technology into Tesla’s electric cars. If successful, the implications of such a development could be huge for the car manufacturer. No longer would the car be limited to a single charge, or tethered to hard to find charging stations. With an unlimited range, the market for the company’s electric cars would increase exponentially.

If the acquisition of SolarCity was too subtle of a clue, the company also increased its credit line $500 million to $1.8 billion, per the article. Is this a sign of capital investment for the manufacturing of solar powered cars? This comes two months after CEO Elon Musk is quoted as saying that raising debt “wouldn’t be necessary”. As something to follow closely in the coming months, solar panel cars may be a new and evolving plan for Tesla Motors.

1 comment:

Sam Norton said...

Tesla just released their first quarter 2017 financial numbers with a best-ever quarterly vehicle production and delivery results which reports a strong first quarter after the purchase of SolarCity in 2016. SolarCity, a solar panel manufacturing company, gave Tesla a wealth of solar panel manufacturing capital. As mentioned in your blog, this valuable solar capital could be used to integrate solar charging technology into Tesla’s electric cars. While these first quarter 2017 financial results are a positive development, it is still a far cry compared to CEO Elon Musk’s goal of quintupling Tesla production to a half million units by 2018.
Tesla reported its growth in its most recognized car, the Model S. The California-based company built 25,418 Model S sedans and Model X crossover vehicles in the first quarter ended March 31, 2017. The Model S has an operating range of 208 to 315 miles on a single battery charge which is fine for short trips and back and forth to work.
Global deliveries totaled “a little bit more than 25,000” of the Model S sedans and Model X crossover vehicles. This is 69 percent better than in the first quarter 2016. The Model S production included 13,450 units and the Model X included 11,550 units.
CEO Elson Musk raised more than $1.2 billion in a stock and debt sale in February 2017 to fund the cost of producing the Model 3, Tesla’s first affordable electric car, at a promised Tesla base price of $35,000. Musk, the youngest United States carmaker, got a boost of confidence last week when Chinese social media network giant Tencent announced in a U.S. regulatory filing that it acquired a 5% stake in Tesla worth about $1.8 billion.
A challenge Tesla faces is in its remaining 2017 production of the Model 3 sedan which has a 400,000 people wait list. Tesla must ramp up its production. Equity analysts are concerned if the new car will launch on schedule in the third quarter of 2017 and if Tesla will achieve an overall production rate of 500,000 vehicles per year in 2018 and one million annually in 2020.
Musk is not afraid of his ambitious goals for Tesla and plans to push the company hard to achieve them. Time will tell if Musk can take Tesla from a highly valued niched brand into a true mass-market automaker. Musk is also pursuing grand plans for Space X to send humans into space in the next year. His vision for Tesla is unique and reflects its company’s culture. They are big and broad. Tesla’s vision is broad enough to last for generations. The future will show if he can execute his vision.