A Tesla Motors 2014 punch list for success
In just about 2 weeks Tesla Motors will report its earnings for Q3 and also its overall 2013 financial performance. Although we will then report the Tesla financial news, good, bad, or otherwise, it is pretty fair to say this was a momentous year for the world’s most innovative automaker. We counted down what the Tesla owners and enthusiasts told us they thought were the most important things Tesla did in 2013. Now we would like to lay out our predictions for what the automaker will have to do to stay successful in 2014.
Searching for Tesla Motors news today, as I do every day, I found one “expert” that I had never heard of before predicting that GM will buy Tesla in 2014. As I am no fan of GM in general (though I love some of their creations) this would break my heart. GM represents every single thing that can possibly be wrong with the automotive world to me and Tesla Motors represents a glimmer of hope for change. Furthermore, since Tesla already works closely with both Mercedes and Toyota, why a sale to GM would happen now is a mystery to me.
Selling Tesla to anyone in 2014 would be a big surprise for me. Unless something unfortunate was to happen to Elon Musk, I can’t imagine why 2014 would be the sell year. The Model S is only 15 months old and it seems that the global market is wide open to Tesla for the S. Tesla just moved the ball down the field 80 yards for a touchdown in 2013. The extra point kick is 2014. Yes, the stock is crazy overvalued, even according to Musk, but he does not seem to me the guy who takes advantage of that now to try to sell Tesla Motors. On the other hand, he is busy with two other companies that are almost equally as exciting. Still, it seems premature.
2014 Punch List For Tesla Success
First, never mind what I personally think. The Tesla owners I poled informally on Tesla Owners’ forums I am lucky enough to be allowed to participate in (since I am not yet an owner) tell me that to them continued roll out of the Supercharger network is important to them. They think it is an exciting part of ownership and though many have used the network, other owners have not simply because it doesn’t take them anyplace they want to go – yet. Keeping the Supercharger network growing received the most feedback by far to my requests for input.
What came next to the Tesla owners was not clear, so from here on out the order is mine. Based on my own instincts I think that Tesla needs to make serious headlines in 2014 about the GEN III. This will be the “every-man’s” Tesla. Now clearly, the car is not slated for release for about 3 or more years. However, Tesla is bound to encounter more challenges next year and in 2015. This year all Tesla had to really push past (in terms of external challenges) was the hype over the fires. It has done so, and it will have to keep the PR machine going to offset that issue, but 2013 could have been harder. In the coming years external factors could bite Tesla. “Regime change” could occur here in America and the huge subsidies that EV owners enjoy could be challenged. It would not be out of the question for a 51% vote in congress to limit EV price supports to cars under $50K. Tesla can hold that off by continuing to remind America that it is really still pushing to bring out a car that can be in an owner’s driveway for about $35K.
Another important thing Tesla needs to do is continue to evolve the Model S. If you wish, combine the Model X with this section, since to me the X is simply an AWD Model S with a different body. If I am wrong about that feel free to blast me in the comments section, but let’s keep it civil. I love the S and I think building an X from as many common parts as possible is a great idea. I don’t mean it as an insult.
When I write that Teslas are cars, and that cars have problems, the fans of the brand freak out and send me hate mail. However, visit any Tesla forum and you can see the many issues that the owners struggle with. Water leaks, door handles that don’t pop out (specifically the rear ones), melting connectors for charging, the list is real, but manageable. Tesla needs to eliminate all these little things, just as any automaker does as a car matures in its lifecycle. The only reason fixing the small Model S issues is on this list is that it was a common point of feedback to my inquiry. Also, I worry that Tesla could look at its limited resources and at some point prioritize the new model over making the Model S the best it can be.
Piggy backed onto this would be more content in the Model S. The car simply does not have things that all of its price range competitors do. When I drove it this summer it had almost no driver aids by comparison to a Mercedes, Audi, or even Lexus of half its price tag. Some owners want autonomous driving. Simply stated there is no automaker farther from that goal than Tesla. It can catch up on its own or simply buy the needed equipment from suppliers. Either way, it needs to leap forward just to catch the pack.
A price reduction would also help Tesla in my own opinion. Even if it were simply a 3% across the board drop in price Tesla could claim it is learning how to save money in its operations and that would boost confidence. Teslas are very expensive. Owners claim that their savings on gas and the tax breaks offset that, but the truth is that a Prius can run for 100,000 miles on just $13,000 worth of gas. Hybrids come with tax breaks too. At some point the math model needs to actually improve for EVs and Tesla could offer up hope.
Here are two things I think Tesla need not do in 2014. I don’t think it needs to hit the 55,000 unit number for Model S production some are bandying about. Why should Tesla do that? In my opinion it should keep the supply tight. That makes the car more desirable. Grow the production, but it does not have anything to prove that requires that production actually double.
Tesla also does not have to make money in 2014. By that I mean it does not have to be cash flow positive. I slammed Tesla in Q3 when it lost money not because it is a bad thing for the company financially, but because the managers had been stupid enough to claim that they would be cash flow positive in 2013. Tesla has mountains of cash to use and it should use it. Go big or go home is a reality in the auto world. Amazon, GM, Ford and many other huge names in the American business world have gone long stretches without making money and still have very bright futures.
2014 should be an easy year for Tesla relatively speaking. That does not mean bad decisions can be overcome, or that the company won’t be exciting to watch. If we have skipped an important goal you think the company should shoot for in the next 12 months please add it below with your reasoning.
Model X image courtesy of the Tesla Motors public page.