Tesla Motors has had quite a brilliant climb into the automotive world. The level of success they have achieved has exceeded all but the most optimistic predictions, and their rise into the limelight has inspired a cult-like following. Tesla's vision and methods are promising, but there are several threats to the long term success of their company. I would like to discuss some of the challenges Tesla faces during it's quest for the mass market, and some of the strategies that might give it an edge over the competition.
The most prominent hurdle Tesla currently faces is in battery technology. Despite using the best Li-Ion technology available, the company is limited by the low energy density of current batteries. The relative size and weight of the batteries restrains the range of the vehicles. Fortunately for Tesla, they are already researching more advanced batteries and streamlining power use as can be seen in the 400 mile Roadster 3.0.
Recently analysts have raised concerns over the expanding demand-supply gap. Tesla is having some problems keeping up with orders and staying on schedule with the delivery of their next vehicle. This is not to criticize their progress; the company has done marvelously thus far. Regardless, if the supply of vehicles is outrun by demand, consumers will lose interest and buy from the competition. Tesla is already expanding their current operation in Fremont, as well as constructing their battery factory in NV. Will this be enough to meet the rising demand?
At $71,000 the Model S is much too expensive to be sold to most consumers worldwide. Tesla will have to rely on its Model 3 mid size sedan to attract the buyers that will give the company stability. However, can the Model 3 be an everyman's car with a $40,000 price tag? My answer would be a resounding no. The vehicle will fill a crucial role in the brand, but I believe Tesla will need a <$30,000 model to capture significant market share. Money talks, and a low cost, reliable electric vehicle is what will beat out competitors and bring electric to the masses.
The public perception of Tesla is ultimately what determines its fate. People who do not like the company will not buy the products. Tesla has been bad mouthed by media, rocked by a handful of battery fires, and had product quality and reliability misrepresented to sell a story. So far it has managed these things deftly, however, it must proceed carefully to ensure that the target market is informed and educated concerning its vision and products.
Overall I have great hope for Tesla as the company seeks to make EVs competitive with their ICE counterparts. However, it must navigate these obstacles and others before it can succeed.