Tesla is no ordinary car company. After a century of stagnation within the U.S. automaker industry, Tesla provides a fresh air of innovation to aging companies such as Ford and GM. Despite all the hype, Tesla has its problems. Tesla’s first biggest problem to key investors may be its lack of direction. Elon Musk, serving as its head, is involved in numerous other projects including SpaceX, Hyperloop, Neuralink, and more. As part of all these ventures, he has promised his cult following big promises. That human will walk on Mars within the next decade, that people will be transported in their commutes via a vacuum less tube, and merge the brain with a computer interface. This leads to the next problem, what he has already promised has not come true. Tesla’s big plan for the company was to build a sports car and channel those revenues to build an affordable car, the Model 3. Within the first-month hundreds of thousands of customers could pay a deposit and pre-order the vehicle but so far there has been delays and shipments of the Model 3 are subject to question. Lastly, not anyone is sure what kind of company Tesla is. Most would tout that it is a car company, but with recent investments, the company seems to be operating differently. Musk claims it is part of the company’s vertical integration plans by investing in energy. Tesla may soon be the energy company with investments in SolarCity, releasing a Tesla Powerwall, and the gigantic Gig factory with more lithium battery production plants planned for its future.
Tesla may be too big to fail, in a good way. The company has made huge strides and diversified its business. It’s no longer competing with German luxury cars but utility, driverless tech, and energy storage companies. One source of worry for past investors was the questionable transition to business and industrial customers. Tesla proved the skeptics wrong after its Powerwall was mostly bought by industrial companies. Over seven in ten Power-walls purchased were by institutional customers rather than individuals, and countries across the world such as Australia are big buyers. Tesla’s driverless car program is among one of the most competitive in the industry. It labels itself self-driving hardware as autopilot and has been critiqued as better than Apple’s. The self-driving car program is also focusing on industrial clients working on the technology for use in trucks doing shipments. Despite the promises, currently autopilot needs to have a driver in the car supervising it always and it received bad PR after one fatality due to relying on the technology too much while watching a movie.
Tesla’s future is clear in that it will be competitive now and in the future with trying to maintain a competitive edge through vertical integration. Musk has even mentioned considering focusing the key segments of the business on batteries and energy considering significant investments in new power cells and partnerships for cell production plants in upstate New York. For now, although, the company needs to focus all its efforts on the Model 3. The production will provide much-needed liquidity for the company and revenues that can be invested into other key business segments. The company has also offered large equity and debt offerings that may prove problematic in the future, subject to high risk. The Model 3 is also a huge source of good PR for the company and branding, and many customers that have already made the deposit are expecting a big improvement from standard cars today.