Tesla Motors

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  Tesla Motors was founded in 2003. The company was founded by Martin Eberhard and Marc Tarpenning. Elon Musk, J. B. Straubel and Ian Wright are now listed as founders because of the important roles they played in the company development. Tesla is an American company that designs, manufactures, and sells electric cars and electric vehicle powertrain components. It is a public company and traded on NASDAQ. It is a remarkable story. The company has gone from its founding in 2003 to $198 billion in sales in 2014 with net income of $294 million.

      Before discussing the company, its strategy and people, it’s important to understand technological product life cycles and how products are incorporated into automobile models. Essentially, there are two approaches to this issue. One is to wait until a new model year to incorporate a new product or innovation along with noticeable cosmetic changes in the car body. Major changes in car bodies usually take place between three and five years. The other approach is to make changes as soon as part or new technology is available. The result is a single model year may have different parts, but the most recent will have the latest technology. This is the case with the Tesla Model S. The Model S was introduced in 2009, but has undergone changes each year. I consider it a new product each year as new technology is added. This is not a surprise since the company is on the cutting edge of electric car development and production.

      Tesla strategy was to initially follow other car companies with products that have a life cycle. The idea was to produce a high-end expensive car targeted at wealthy buyers. This changed with success and consumer acceptance of its first model. The strategy shifted to the large competitive market at lower price points. The Model S is a step between the two. Tesla first produced a Roadster with base price of $109,000. Several thousand Roadsters were sold. The Roadster had an average range of 245 miles and acceleration of 0-60 mph in 4 seconds. Next came the Model S. It is a high performance luxury car starting at $57,400. New models are expected in 2015 - (model X) a sedan in the $35,000 range and in 2017, (model 3) a SUV. All will be electric vehicles.  The model S has been so successful that there is a six month wait to buy one. Tesla's workforce went from a few dozens to three thousands and now stands at six thousands.

      Tesla's idea to build the Model S was a big dream that required big money. Through four rounds of financing, Tesla was able to raise $105 million. Musk was a big investor along with Sergey Brin and Larry Page of Google, former President of eBay President Jeff Skoll and Nick Pritzker of Marriott. Government also played a big role by making a loan of $465 million in 2009. The loan has been repaid.

      In order to stay on the frontiers of automotive electric technology, Tesla has partnered with Toyota and Daimler as well as with battery maker Panasonic and other suppliers. The partnerships has led to storing the lithium-ion batteries in the under carriage instead of in the trunk. Tesla does not use single purpose large format battery cells. It use thousands of commodity lithium-ion cells. They are the same cells used in laptops and other consumer electronics. Tesla version of the cells is lighter in weight and cheaper. Tesla has also been spurred by a fire in three car while traveling at high speed and hitting objects. To protect the batteries from a possible fire in future, a quarter inch aluminum-alloy armor plate enclose the batteries. No fires has occurred since. Another aspect of sharing technology is a goal of converting the entire automotive industry to electric cars. The model S demonstrates that electric car be sold at a profit. The giants of the business are years behind in some of this technology.