Summary: Tesla had high hopes for their newest and most affordable car, the Model 3. The Model 3, starting at a price of $35,000, is much cheaper than their previous cars that cost $70,000 or more. However, due to manufacturing malfunctions, Tesla has lost a great deal of money in the process. Tesla has reported a record loss of $675.4m in three months compared to a loss of $121.3m the year before. Though Tesla has lost a significant amount of money since the production of the Model 3, Tesla still remains optimistic for the future. They say that they "have learned many lessons" and expect rates to go up in the future.
Questions:
1. Do you think that more companies will take a risk like this and make more affordable cars?
2. Do you think that the Model 3 will be successful for Tesla?
Source:
http://www.bbc.com/news/business-42980841
14 comments:
All of Tesla's previous models faced major manufacturing setbacks. Musk has always over promised and under delivered.
However, I think that the Model 3 will be successful. It's just going to take longer than expected for it to be profitable. I think they were expecting to lose money because they don't plan on turning a profit until manufacturing is fully ramped up. This was how it worked for previous Tesla models.
Yes, I do believe that more high-end car companies will jump on the "affordable luxury vehicle" bandwagon, as I believe the strategy will definitely pay off in the future for these car companies. I ultimately also believe that the Model 3 will be successful. This is because Tesla has been founded on the ideal of "the future," and their revolutionary business strategies that other luxury car companies haven't done have, for the most part, payed off, and I don't believe the affordable Model 3 will be any exception.
I think the Model 3 will become successful, like Michael said, once manufacturing becomes cheaper and quicker, which should be in the near future. There have been very few models sold so far and the car is so cheap relative to its potential, so it's not a huge surprise that they lost some money early in the process. I think once the Model 3 succeeds and becomes a lot more common, other companies will try to replicate and sell their own cheaper electric cars, which could even push Musk to come up with another cheaper Tesla car.
I think that these substantial losses are the growing pains of Tesla attempting to expand from its somewhat niche market appeal as a luxury electric car provider. I also think that the answer to the first question will be determined by the answer of the second question. While I am by no means an expert on the automobile industry, it would simply not make sense for more luxury brands to sell cheaper cars if sales for the model 3 do not increase. As for the success of the model 3, I am dubious in asserting any extreme failure or success, due to the fact that the market is open for electric cars, yet Tesla's past success can be said to come from their prestige, a prestige that is lost with a lower priced model.
I agree with Michael, loss is an expected thing by tesla until production has fully ramped up. Like the high speed rail, engineering projects always go over time and over budget. Tesla is setting up the infrastructure to build these cars, once it is set up, the marginal cost of producing a tesla will go down and it will be more cost efficient for the company.
i believe that companies will be willing to take measures like these. being able to target the lower to middle class will bring a significant profit due to many people seeking a car within a affordable price.The model three idea was successful with the idea of lowering the prices, but the failirure to function properly has caused them debt.The tesla 3 will be successful in the future as they begin to patch the problems, allowing a cheaper but good quality car to be created.
As others have said losses are to be expected, but overall diversifying their target market will be overall advantageous. Tesla has currently been marketed as a mid to high market car and has found massive popularity, especially in the bay area and creating cheaper cars seems like the next logical step for asserting dominance over the electric car industry. While the growing pains may seem like setbacks they are just minor annoyances in the companies overall plan and this move will ultimately be profitable and successful
A lot of Tesla's failures can be attributed to Musk not paying as much attention to Tesla, as he is focused on multiple projects in SpaceX and the hyperloop. I think that with the restructuring of Tesla's manufacturing process and the change in costs for the car that it will eventually become successful, just that it is like what Michael said, going to take a long time for Tesla to reap the profit from the expenditure it invested.
I'm sure that Tesla's Model 3 will bring in lots of money for the company as the kinks are worked out, and as manufacturing rates go down with improved technology. Even if the cars do not turn out as successful as planned, Elon Musk will still come up with other products to sell on the market, like his flamethrowers. I don't follow cars that much, but I recently heard that GM is working on a few new electric car models, and plans to release them in the next couple of years. If sold at an affordable price, I'm sure that GM could be solid competition for Tesla in the electric car market.
As Naomi stated, I'd assume Tesla's Model 3 will be very successful once all problems are take care of. If they really lower the price down to $35,000 , I think a lot more people will see that as much more of a practical price, so Teslas might even become in high demand. As manufacturing continues to become cheaper, I think other companies will also try to copy their tactics and produce cheaper cars under their brand. This may cause engineers to develop an even cheaper car so that more people will be able to afford their own vehicle. These setbacks are only minor, and won't hurt the overall success of Tesla's Model 3.
I think since Tesla has gone through their struggles, they will learn from their mistakes. With that being said I do think that the Model 3 will give Tesla a better year financially. Especially since they have opened up to a whole new group of consumers with the price being $35,000, their profits should improve. Although Tesla is losing money, their overall growth of the company over the past few years has grown and that should result in long term benefits financially.
I also believe the Model 3 will be successful. I think by creating a car that is more affordable, more people will be able to purchase it, which in the long run will be profitable. This is a good move on Tesla's part because they are expanding from a small group of consumers, being the upper class, and entering a bigger market. I think that Tesla is taking a good risk and may lose money at the start, but after awhile with better manufacturing and more advertising, they will be able to turn it around for a profit.
I think the Model 3 will definitely be a successful car. Tesla is known as one of the most luxurious cars in the world. By creating a car that is affordable with the name "Tesla" slabbed onto it, I feel like thousands of people will buy it in order to feel like they are apart of the higher class. This is a great move by Tesla because they are expanding there buyer options across all walks of life. Anything that just starts out is likely to loose money, but often times a strong rebound is common.
I really don't get why people make such a big deal out of Tesla. I feel that Tesla has evolved to become the Apple of the car manufacturing world. Though they in no way have they come close to matching Apple's financial success, for some reason Tesla always seems to tickle american consumers/ the media. Tesla announced their first ever "reasonably priced car" and everyone seemed to be super not that excited about it. I think the reason is that with model 3 tesla lost their edge. Their edge came from their beautiful/elegant cars that really tech enthusiast excited, but you take away that super fancy edge and give a car a more economic facade, it will no longer complete with competitors like chevy.
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