Should Tesla continue making cars?

Should Tesla continue making cars?

Musk wants to replace oil-driven vehicles with electric ones. He started Tesla Motors to point the way, willing to share in order to spread the word.

What is the quickest and easiest and most profitable way to do this? Manufacture and sell various model Teslas? Or simply supply turn-key electromotive units to other manufacturers?

What if, say, Ford just made bodies and Tesla just made the power plants? Both would save billions specializing. Tesla would not have to set up numerous incredibly complex vehicle assembly plants and Ford could ditch motor and transmission plants, and of course solve all of their regulatory problems concerning mileage and pollutants. And, per Tesla's success, Ford could make safer vehicles that would more easily meet future regulations there as well.

Also factor in the relative ease of producing AWD variants, and incorporating traction, brake, yaw, etc. controls.

And a "Powered By Tesla" emblem would elevate the brand like nothing else.

The key, as I always nag about, is to also set up Tesla Electron Stations everywhere to profitably charge up all the electric drive vehicles using their technology. Ford buyers are hardly going to accept extension cords and 5-hour charges in random locations.

You could envision Ford also wanting a piece of the charging station business because they would continue to make a profit on their cars for as long as they are being driven!

If this all makes sense for Ford, then maybe others would also want to join in as well. This scenario would allow Tesla to specialize and to be more than competitive with rival suppliers in al respects.

This could make Tesla the most profitable company on earth and serve to electrify the most vehicles and other things in the shortest time at the lowest cost possible.

It would also be a better option for potential partners like Apple. Apple likely does not want to make cars and get involved in all that. But, I could see them wanting to invest in the battery side of things and of course the in-car electronics. No need to invest in fenders and lug nuts...

Tesla stock might just rise a teeny bit (!) and there would be capitalization than they would know what to do with and this could lead to some spectacular innovations and projects down the road.

I think making cars will at some point just weight Tesla down, but of course they should still make a few special cars to keep the brand name upscale and desirable.

Iowa92x | February 21, 2014


Tiebreaker | February 21, 2014

Of course.

Webcrawler | February 21, 2014

No good reason not to do both as they are doing now....

TSLAholic | February 21, 2014


your proposition assumes other auto manufacturers are interested in electrification. Truth of the matter is they are not. At least not yet. They will eventually be forced with a decision to either go EV, or experience drastic market share losses. I say let capitalism take its course. So the answer to your question is yes.
Also, it was never Tesla's intention to remain an upscale company.

LeonardD | February 21, 2014

Tesla is already partnering with Toyota and Mercedes to provide drive trains. While it makes sense for other manufacturers to get components for EVs from Tesla, they are not likely to do it simply because they want to pursue other technologies such as Hydrogen Fuel Cells.

Electricity is widely available, but there is no infrastructure for hydrogen. Perhaps in about 20 years, but no time soon. In California there are some refilling stations but they are very limited and really intended as a commercial pilot program.

Tesla has the best solution for today and the foreseeable future. What is better that being able to refuel (charge) your car in your own garage at night, when the rates are best?

Car t man | February 21, 2014

And that this is all about common sense, etc. It is about many interests, prestige, etc. Other makers passed on this tech years ago.

This isnt' really new. It was abandoned and buried on purpose.
Lithium batteries also make a difference today but NiMhs were
actually very very good years ago.

jordanrichard | February 21, 2014

The traditional auto makers will keep the EVs as their "economy car". They don't make much profit on their entry level cars anyways. Their bread and butter is form their mid size and full size cars. They are not going to mess with that formula. I mentioned it before in other posts, Nissan obviously knows how to make a functioning EV (Leaf). If they really wanted to, they could build a mid size EV with a larger battery/range. Problem is Nissan can build it, but their customers (dealers) will not buy it. There is no real money to be made on the backend (parts/service),

Bubba2000 | February 21, 2014

Elon Musk is all about vertical integration. Tesla factory is vertically integrated. They make the body, electric motors, gears, package electronics, battery pack,injection molded plastic parts, etc. Tesla wants control of IPRs,quality, etc. Tesla sells parts to MB, Toyota, but neither are really committed to BEVs. Just a side bet.

I can not see how proud companies like MB, BMW, F, VW woul just buy Tesla parts and be box makers like PCs.

Brian H | February 22, 2014

Probably needs a second-tier player (Hyundai?) to start the ball rolling, then get big enough to scare the rest into line. Sweeten the pot by offering to retrain automechs as BEV service techs and factory workers? At 60% of previous earnings + options, of course.

carlgo | February 22, 2014

Musk probably concluded that he would HAVE to manufacture electric cars in order to get this going, but if other companies were willing to partner up THEN he would then have a decision to make.

It think electric cars will prove to be more profitable than ICE models and this will eventually motivate manufacturers. And the most profitable way to get into this is to use off-the-shelf components. Will anyone be able to compete with Tesla's technology or manufacturing ability to make them at the lowest possible cost?

And the recharging business would be worth many billions per year to whoever does it right and again Tesla seems to have the technology that allows for the fast charging of big batteries.

Nag, nag, nag...charging is the absolute key to everything.

Mike T | February 22, 2014

If they are turning a decent profit with new vehicles, I don't see why Tesla wouldn't keep manufacturing and maintain/support existing vehicles for their customers.

chenglo1 | February 22, 2014

I can see the EV industry making big time when the local gas stations or gas stations along the highway start adding 2 to 3 charging stations in addition to their gas pumps. C'mon the return on investment for the electric stations gotta be pretty decent considering the price of electricyt vs the gas that needs to be hauled in! Perhaps, TESLA should start subleasing property from the stations along the highways? These stations can just charge us for recharges (just at the going rates though...) In return, we might go in and eat at their deli's. Hmm...maybe add the superchargers tot he millions of McDonalds stops instead!

Sorry mght be a little off topic but i think this would help speed up the Supercharger idea and also help spur sales of EV's, particulary Tesla's. Keep in mind, if Tesla owns these stations, they need to remain free for life for Tesla owners though!

Iowa92x | February 22, 2014

Tesla is more like Apple than Microsoft. Apple builds the hardware and software and delivers the complete package. Microsoft is primarily a software company that resells to hardware makers and allows them to install in their laptops and PCs. Advantages and disadvantages to both types.

Over time, maybe Tesla will start selling the drivetrain to other companies, similar to how they are a tiny bit now to Toyota and Mercedes.