Tesla, Inc. (formerly Tesla Motors) is an American automaker, energy storage company, and solar panel manufacturer based in Palo Alto, California. Founded in 2003, the company specializes in electric cars, lithium-ion battery energy storage, and residential photovoltaic panels (through the subsidiary company SolarCity).[ The additional products Tesla sells include the Tesla Powerwall and Powerpack batteries, solar panels and solar roof tiles.
CEO Elon Musk said that he envisions Tesla as a technology company and independent automaker,[11] aimed at eventually offering electric cars at prices affordable to the average consumer.[12][13] The company was named after the Serbian-American electrical engineer and physicist Nikola Tesla by company co-founders Martin Eberhard and Marc Tarpenning.[14][15][16][17]
The company's Model S was the world's best-selling plug-in electric car in 2015 and 2016.[18][19] Global sales of the Model S reached 150,000 units in November 2016.[20] In September 2015 the company released its Model X, a crossover SUV. The Model 3[21] was released in July 2017.[22][23][24] Tesla global sales passed 250,000 units in September 2017.[25][26][27]
Tesla operates multiple production and assembly plants, notably Gigafactory 1 near Reno, Nevada and its main vehicle manufacturing facility at Tesla Factory in Fremont, California. The Gigafactory primarily produces batteries and battery packs for Tesla vehicles and energy storage products.
In 2016, Tesla topped Consumer Reports' Annual Owner Satisfaction Survey at 91%.[29] In February 2017, Consumer Reports named Tesla as the top American car brand and ranked it 8th among global carmakers.
Roadster and private funding
The company was founded in 2003 by Martin Eberhard and Marc Tarpenning, although the company also considers Elon Musk, JB Straubel and Ian Wright as cofounders.[1] The founders were influenced to start the company after GM recalled and destroyed its EV1 electric cars in 2003.[31]
Eberhard and Tarpenning funded the company until the Series A round.[6] Musk led the Series A in February 2004, joining the board of directors as its chairman as well as in operational roles. Musk was then the controlling investor in Tesla, providing the large majority of the US$7.5 million round with personal funds. Co-founder Martin Eberhard was the original CEO of Tesla until he was asked to resign in August 2007 by the board of directors.[6][32] Eberhard then took the title of "President of Technology" before ultimately leaving the company in January 2008 along with co-founder Marc Tarpenning, who served as the CFO and subsequently the Vice President of Electrical Engineering of the company until 2008. [6][32]
Tesla began with a sports car aimed at early adopters followed by mainstream and mass market vehicles,[33][34] all serving "as a catalyst to accelerate the day of electric vehicles".[35]
Tesla signed a Roadster production contract on July 11, 2005, with Group Lotus to produce "gliders" (complete cars minus powertrain).[36] The Roadster used an AC motor descended directly from Nikola Tesla's original 1882 design.[37]
The Tesla Roadster (2008) was the first production automobile to use lithium-ion battery cells and the first production EV with a range greater than 200 mi (320 km) per charge.[38] Between 2008 and March 2012, Tesla sold more than 2,250 Roadsters in 31 countries.[39][40][41] Tesla stopped taking orders for the Roadster in the U.S. market in August 2011.[42]
In December 2012, Tesla employed almost 3,000 full-time employees.[43][44] As of late 2016, Tesla now employs over 30,000 (25,000 in the US) after acquiring Grohmann and SolarCity.[45]
Musk also led Tesla's Series B US$13 million investment round and co-led the third, US$40 million round in May 2006. Tesla's third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin and Larry Page.[46] The fourth round in May 2007 added another US$45 million.
In late 2007, Tesla brought on Michael Marks,[47] and later Ze'ev Drori, to replace Eberhard as CEO.[48] Drori temporarily returned the company to profitability, reducing the company's workforce by about 10%.[49] In October 2008, Musk became CEO and laid off an additional 25% of Tesla's workforce.[48] In December a fifth round added another US$40 million, avoiding bankruptcy.[50][51]
By January 2009, Tesla had raised US$187 million and delivered 147 cars. Musk himself had invested US$70 million.[49][52] In May, 2009 Daimler AG acquired an equity stake of less than 10% of Tesla for a reported US$50 million,[53][54] again saving Tesla.[55] Toyota provided a similar amount in 2010.[54]
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In June 2009 Tesla was approved to receive US$465 million in low-interest loans from the 2007 US$8 billion Advanced Technology Vehicles Manufacturing Loan Program by the United States Department of Energy.[56] The funding came in 2010 and supported engineering and production of the Model S, as well as the development of commercial powertrain technology.[56]
IPO and Model S
On June 29, 2010, Tesla launched its initial public offering (IPO) on NASDAQ. 13,300,000 shares of common stock were issued to the public at a price of US$17.00 per share.[57] The IPO raised US$226 million.[58]
Tesla began shipping its Model S sedan in June 2012[59] and its Model X crossover SUV in September 2015.[60] Global sales of the Model S reached 100,000 in December 2015.[61]
Model 3 was unveiled in March 2016. A week after the unveiling, global reservations totaled 325,000 units.[22][62] As a result of the demand for Model 3, in May 2016 Tesla advanced its 500,000 annual unit build plan (for all models) by two years to 2018.[63][64]
In May 2013 Tesla raised $1.02 billion ($660m from bonds) partially to repay the DOE loans (early[65]) after their first profitable quarter.[66][67] In February 2014 the company sold $2 billion in bonds (to build GigaFactory 1).[67] In August 2015 Tesla sold $738 million in stock (for the Model X)[68]and in May 2016 $1.46 billion in stock ($1.26 billion for the Model 3).[69] As of January 29, 2016, Musk owned about 28.9 million Tesla shares, or about 22% of the total.[70][71]
Tesla stated that its automotive branch had a gross margin of 23.1% as of 2Q2016, and has generally been above 20%.[72] However, expenditures[73][74] for expanding future production (such as Gigafactory 1[75] and Model 3[76]) are bigger than product profit, resulting in a net loss.[77]
In late March 2017, Tesla Inc. announced that Tencent Holdings Ltd., at the time China's "most valuable company," had purchased a 5% stake in Tesla for $1.8 billion.[80]
In 2017, Tesla briefly surpassed Ford Motor Company and General Motors in market capitalization for a couple of months, making it the most valuable American automaker.[81][82] In June 2017, Tesla appeared for the first time in the Fortune 500 list.[81]
Production and sales
| Quarter | Total production | Model S sales | Model 3 sales | Model X sales | Total sales[a] | In transit[b] | Source |
|---|---|---|---|---|---|---|---|
| Q1 2015 | 11,160 | 10,045 | 10,045 | [83] | |||
| Q2 2015 | 12,807 | 11,532 | 11,532 | [84] | |||
| Q3 2015 | 13,091 | 11,597 | 6 | 11,603 | [85] | ||
| Q4 2015 | 14,037 | 17,272 | 206 | 17,478 | [86] | ||
| Q1 2016 | 15,510 | 12,420 | 2,400 | 14,820 | 2,615 | [64] | |
| Q2 2016 | 18,345 | 9,764 | 4,638 | 14,402 | 5,150 | [87][88] | |
| Q3 2016 | 25,185 | 16,047 | 8,774 | 24,821 | 5,065 | [89] | |
| Q4 2016[c] | 24,882 | 12,700 | 9,500 | 22,254 | 6,450 | [27][90] | |
| Q1 2017 | 25,418 | ~13,450 | ~11,550 | 25,051 | ~4,650 | [91] | |
| Q2 2017 | 25,708 | ~12,000 | ~10,000 | 22,026 | ~3,500 | [92][93] | |
| Q3 2017 | 25,336 | 14,065 | 220 | 11,865 | 26,150 | 4,820 | [94] |
- ^ Sales are only counted as sold when delivered to end customer and all paperwork is correct
- ^ Goods in transit are produced but not counted as sold until delivered
- ^ Sales by model do not add up to total, these are preliminary figures reported Tesla. Only total sales is final figure reported by Tesla, as breakdown by model was not provided in its Fourth Quarter & Full Year 2016 Update report.
Tesla deliveries vary significantly months due to regional issues such as ship availability and registration. Tesla does not follow the auto industry standard of monthly reporting.[95]Some monthly sales are estimated by media.[96]
SolarCity
On August 1, 2016, Tesla agreed to acquire SolarCity Corp. for $2.6 billion in stock. SolarCity is the largest installer of rooftop solar systems in the United States.[97] More than 85% of unaffiliated Tesla and SolarCity shareholders voted to approve the acquisition,[98][99] which closed on November 21, 2016.[100]
Model 3 rollout
In the week preceding the debut on July 7, 2017, of the Model 3 sedan, Tesla's stock-market value declined by more than $12 billion from a previous value of $63 billion. The loss was a result of a combination of factors that disappointed investors. Demand for Tesla’s luxurious existing models, Model S and Model X, did not grow in the second quarter.[101] Brian Johnson of Barclays said that customer deposits for the Model S and Model X fell by $50 million, potentially indicating that Tesla's introduction of the Model 3 could be adversely affecting their sales. Tesla predicted that luxury sales would reach 100,000 per year, below some analysts' expectations.[102]
Investors expressed concern about Tesla's plans for execution and competitive risk, as Volvo committed to eliminate its petroleum-only vehicles by 2019.[101] Johnson claimed that "Tesla will face intense competition by the next decade."[103]
Morningstar analyst David Whiston foresaw a revised, slower timetable for the Model 3 and a company acknowledgement of problems with building battery packs for its cars. In 2016 Musk predicted 100,000 Model 3 units would be sold in 2017, but that production may reach only 20,000 by December. Axel Schmidt, a managing director at consulting firm Accenture, said that Tesla’s problems with Gigafactory 1 prove that increasing Model 3 production "remains a huge challenge".[103]
As of October 2017, Tesla reported delivery of 220 Model 3s, acknowledging this was "less than anticipated due to production bottlenecks".[104]
In early November 2017, Musk advised investors of a production delay that was primarily due to difficulties with the new battery that would allow Tesla to significantly reduce the manufacturing cost of the Model 3. The company was having difficulties with robots on the assembly line[105] but the most serious issue was with one of the four zones in the battery, caused by a "systems integration subcontractor", according to Musk.[106] "We had to rewrite all of the software from scratch for the battery module", he reported.[107] He assured investors that Tesla had "reallocated" top engineers to work on achieving a solution. By that time, Jon Wagner, director of battery engineering, had left the company.[108]
Musk postponed the target date for manufacturing 5000 of the vehicles per week from December 2017 to "sometime in March" 2018.[105] When asked when the company would reach a production level of 10,000 units per week, he declined to speculate.[107][109] An analyst with Cowan and Company commented that "Elon Musk needs to stop over promising and under delivering".[110]
On November 21, 2017 Bloomberg stated that "over the past 12 months, the electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour)".[111]
Strategy
Tesla aims to disrupt the automotive industry by creating many innovative pieces that fit together; this strategy was called "complex coordination" by Tesla investor Peter Thiel.[112] Its marketing, production, sales and technology strategies all are notably different from its competitors.
Tesla's automotive strategy is to emulate typical technological-product life cycles and initially target affluent buyers. It would then move into larger markets at lower price points.[33][113] The battery and electric drivetrain technology for each model would be developed and paid for through sales of the earlier models.[33][114] The Roadster was low-volume and priced at US$109,000. Model S and Model X targeted the broader luxury market. Model 3 is aimed at a higher-volume segment.[34][115] This business strategy is common in the technology industry.[116] According to a Musk blog post, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."[117]
Tesla's production strategy includes a high degree of vertical integration (80% in 2016 according), which includes component production and proprietary charging infrastructure. The company operates enormous factories to capture economies of scale. Tesla builds electric powertrain components for vehicles from other automakers, including the Smart ED2 ForTwo electric drive (the lowest-priced car from Daimler AG), the Toyota RAV4 EV, and Freightliner's Custom Chassis Electric Van. Vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers,[118] and focus on engine manufacturing and final assembly.[119][120]
Tesla's sales strategy is to sell its vehicles in company-owned showrooms and online rather than to use a conventional dealer strategy.[121][122]
Tesla's technology strategy focuses on pure-electric propulsion technology, and transferring other approaches from the technology industry to transportation, such as online software updates.[124] Tesla allows its technology patents be used by anyone in good faith.[125] Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly.[126] Tesla retained control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.[127]
Tesla Human Resources VP Arnnon Geshuri committed to bringing manufacturing jobs "back to California".[128][129] In 2015, Geshuri led a hiring surge about which he said; "In the last 14 months we've had 1.5 million applications from around the world. People want to work here."[130] Geshuri emphasizes hiring veterans, saying "Veterans are a great source of talent for Tesla, and we're going after it."[129][131][132]
Sales
Its top selling car is the Model S, with global sales of over 197,600 units between June 2012 and September 2017, followed by the Model X with almost 59,000 units sold between September 2015 and September 2017.[18][91][92][94] The Model 3 with 220 units sold during the third quarter of 2017.[94] The now-retired Roadster sold about 2,450 units.[133]
In 2016 BYD Auto was the world's top selling plug-in car manufacturer with 101,183 units sold, followed by Tesla with 76,243.[18][19] However, Tesla revenues ranked ahead with US$6.35 billion, while BYD notched US$3.88 billion.[134]
Also in 2016, the company sold US$1 billion worth of cars in China, the world’s largest market for electric vehicles, and in October of the following year it reached an agreement with the Chinese government to build a factory in Shanghai.[135]
In July 2017 Tesla said their vehicles had traveled 5 billion mi (8 billion km).[136]
As of October 2016, Tesla operated about 260 galleries or retail locations in the United States.[137] In June 2016, Tesla opened its first store-within-a-store: a small outpost within the Nordstrom's department store at The Grove shopping mall in Los Angeles.[138] In 2017, Tesla opened retail locations in Dubai and South Korea.[139]
In August 2015, Tesla launched a revamp of its stores to include interactive displays focused on safety, autopilot, charging network and motors.[140]
In 2017 Tesla had a US$52 million marketing budget and used a referral program and word of mouth to attract buyers.[141][142]
US dealership disputes
Tesla operates stores and galleries[143][144]—usually located in shopping malls—in many U.S. states. However, customers buy vehicles only from the Tesla website.[145][146][147][148] The stores serve as showrooms that allow people to learn about the company and its vehicles. Some galleries are located in states with restrictive dealer protection laws that prohibit discussing price, financing, and test drives, as well as other restrictions.
Tesla's strategy of direct customer sales and owning stores and service centers is different from the standard dealership model in the global vehicle marketplace. Tesla is the only automaker that sells cars directly to consumers; all others use independently owned dealerships[149][150] although many provide online configuration and financing.[151][152][153] 48 states have laws that limit or ban manufacturers from selling vehicles directly to consumers,[154][155][156] and although Tesla has no independent dealerships, dealership associations in multiple states have filed lawsuits over Tesla's sales practices.
Countries other than U.S. do not protect dealers. The Federal Trade Commission recommends allowing direct manufacturer sales,[157][158]which analysts believe would save consumers 8% on average.[159][160]
Used vehicles
Under a buyback program called the Resale Value Guarantee available in 37 U.S. states, a Tesla Model S sold before July 1, 2016 included the right to return it after three years with reimbursement of 43% to 50% of its initial price. This reimbursement matched the trade-in values of competitive German luxury cars of that age. In addition to maintaining the resale value, Tesla hoped to secure a supply of used cars to refurbish and re-sell with warranty. According to Automotive News, the profit margin on used car sales in the U.S. is about triple that on new cars, and Tesla's direct sales would allow it capture resale profits.[161] Tesla ended the program in 2016 although they retained the Residual Value Guarantee on leased vehicles.[162][163]
In May 2015, Tesla started selling refurbished Model S cars in the U.S.[164] and within a month sold 1,600 cars.[165] As of July 2017, over 80 used Model S and Model X cars were for sale, with either a four-year, 50,000-mile warranty[166] or a two-year, 100,000-miles warranty for vehicles above 50,000 miles.[167][168] As of September 2015, similar programs existed in Canada,[169] Austria,[170] Belgium,[171] Denmark,[172] France,[173] Germany,[174] Britain,[175] Netherlands,[176] Norway,[177] Sweden[178] and Switzerland.[179]
Technology
As a vertically-integrated manufacturer, Tesla has had to master multiple technology domains, including batteries, electric motors, sensors and artificial intelligence.
Batteries
Unlike other automakers, Tesla does not use individual large battery cells, but thousands of small, cylindrical, lithium-ion commodity cells like those used in consumer electronics. It uses a version of these cells that is designed to be cheaper to manufacture and lighter than standard cells by removing some safety features. According to Tesla, these features are redundant because of the advanced thermal management system and an intumescent chemical in the battery to prevent fires.[180] Panasonic is the sole supplier of the cells and cooperates with Tesla in the Gigafactory 1's '21-70' cells.[181]
In February 2016, Tesla battery costs were estimated at US$200 per kWh.[119] Tesla indicated later in 2016 that their batteries cost less than $190/kWh.[182] Still later that year Argonne Labs estimated $163/kWh at a production rate of 500,000 packs per year.[183][184]
The batteries are placed under the vehicle floor. This saves interior and trunk space but increases risk of battery damage by debris or impact. The Model S has 0.25 in (6.4 mm) aluminum-alloy armor plate.[185] CTO Straubel expected batteries to last 10–15 years,[186] and discounts using electric cars to charge the grid (V2G) because the related battery wear outweighs economic benefit. He also prefers recycling over re-use for grid once they reach the end of their useful life for vehicles.[187][188] Since 2008, Tesla has worked with ToxCo/Kinsbursky to recycle worn out RoHS batteries, which will be an integral part of GigaFactory.[189][190][191]
Motors
Tesla makes electric induction motors with three phase, four pole AC and copper rotor.[192] Motors for the Model S and Model X are made at Tesla Factory, while motors for Model 3 are made at Gigafactory 1.
Autopilot
Tesla Autopilot provides semi-autonomous driver assist beginning in September 2014. Tesla replaced its sensors and software in 2016 (HW2). As of 2017, Autopilot included adaptive cruise control, lane departure warning, emergency braking, Autosteer (semi-automated steering), AutoPark (parallel and perpendicular parking) and Summon (recalling the vehicle from a parking place).[193][194] HW2 became HW2.5 with summer 2017 upgrade that included a second GPU and a driver-facing camera.[195]
HW2 includes eight cameras and twelve ultrasonic sensors, in addition to forward-facing radar.[196]
At the end of 2016, Tesla expected to demonstrate full autonomy by the end of 2017.[197][198] In April 2017 Musk predicted that in around two years drivers would be able to sleep in their vehicle.[199]
Tesla glass
In November 2016, the company announced the Tesla glass technology group. The group is developing glass for use in SolarCity roof tiles that were announced in October 2016. The group also manufactures the roof glass for the Tesla Model 3.[200]
The glass roof tiles which contain an embedded solar collector are one third lighter than standard roof tiles.
Roadster and private funding
The company was founded in 2003 by Martin Eberhard and Marc Tarpenning, although the company also considers Elon Musk, JB Straubel and Ian Wright as cofounders.[1] The founders were influenced to start the company after GM recalled and destroyed its EV1 electric cars in 2003.[31]
Eberhard and Tarpenning funded the company until the Series A round.[6] Musk led the Series A in February 2004, joining the board of directors as its chairman as well as in operational roles. Musk was then the controlling investor in Tesla, providing the large majority of the US$7.5 million round with personal funds. Co-founder Martin Eberhard was the original CEO of Tesla until he was asked to resign in August 2007 by the board of directors.[6][32] Eberhard then took the title of "President of Technology" before ultimately leaving the company in January 2008 along with co-founder Marc Tarpenning, who served as the CFO and subsequently the Vice President of Electrical Engineering of the company until 2008. [6][32]
Tesla began with a sports car aimed at early adopters followed by mainstream and mass market vehicles,[33][34] all serving "as a catalyst to accelerate the day of electric vehicles".[35]
Tesla signed a Roadster production contract on July 11, 2005, with Group Lotus to produce "gliders" (complete cars minus powertrain).[36] The Roadster used an AC motor descended directly from Nikola Tesla's original 1882 design.[37]
The Tesla Roadster (2008) was the first production automobile to use lithium-ion battery cells and the first production EV with a range greater than 200 mi (320 km) per charge.[38] Between 2008 and March 2012, Tesla sold more than 2,250 Roadsters in 31 countries.[39][40][41] Tesla stopped taking orders for the Roadster in the U.S. market in August 2011.[42]
In December 2012, Tesla employed almost 3,000 full-time employees.[43][44] As of late 2016, Tesla now employs over 30,000 (25,000 in the US) after acquiring Grohmann and SolarCity.[45]
Musk also led Tesla's Series B US$13 million investment round and co-led the third, US$40 million round in May 2006. Tesla's third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin and Larry Page.[46] The fourth round in May 2007 added another US$45 million.
In late 2007, Tesla brought on Michael Marks,[47] and later Ze'ev Drori, to replace Eberhard as CEO.[48] Drori temporarily returned the company to profitability, reducing the company's workforce by about 10%.[49] In October 2008, Musk became CEO and laid off an additional 25% of Tesla's workforce.[48] In December a fifth round added another US$40 million, avoiding bankruptcy.[50][51]
By January 2009, Tesla had raised US$187 million and delivered 147 cars. Musk himself had invested US$70 million.[49][52] In May, 2009 Daimler AG acquired an equity stake of less than 10% of Tesla for a reported US$50 million,[53][54] again saving Tesla.[55] Toyota provided a similar amount in 2010.[54]
In June 2009 Tesla was approved to receive US$465 million in low-interest loans from the 2007 US$8 billion Advanced Technology Vehicles Manufacturing Loan Program by the United States Department of Energy.[56] The funding came in 2010 and supported engineering and production of the Model S, as well as the development of commercial powertrain technology.[56]
IPO and Model S
On June 29, 2010, Tesla launched its initial public offering (IPO) on NASDAQ. 13,300,000 shares of common stock were issued to the public at a price of US$17.00 per share.[57] The IPO raised US$226 million.[58]
Tesla began shipping its Model S sedan in June 2012[59] and its Model X crossover SUV in September 2015.[60] Global sales of the Model S reached 100,000 in December 2015.[61]
Model 3 was unveiled in March 2016. A week after the unveiling, global reservations totaled 325,000 units.[22][62] As a result of the demand for Model 3, in May 2016 Tesla advanced its 500,000 annual unit build plan (for all models) by two years to 2018.[63][64]
In May 2013 Tesla raised $1.02 billion ($660m from bonds) partially to repay the DOE loans (early[65]) after their first profitable quarter.[66][67] In February 2014 the company sold $2 billion in bonds (to build GigaFactory 1).[67] In August 2015 Tesla sold $738 million in stock (for the Model X)[68]and in May 2016 $1.46 billion in stock ($1.26 billion for the Model 3).[69] As of January 29, 2016, Musk owned about 28.9 million Tesla shares, or about 22% of the total.[70][71]
Tesla stated that its automotive branch had a gross margin of 23.1% as of 2Q2016, and has generally been above 20%.[72] However, expenditures[73][74] for expanding future production (such as Gigafactory 1[75] and Model 3[76]) are bigger than product profit, resulting in a net loss.[77]
In late March 2017, Tesla Inc. announced that Tencent Holdings Ltd., at the time China's "most valuable company," had purchased a 5% stake in Tesla for $1.8 billion.[80]
In 2017, Tesla briefly surpassed Ford Motor Company and General Motors in market capitalization for a couple of months, making it the most valuable American automaker.[81][82] In June 2017, Tesla appeared for the first time in the Fortune 500 list.[81]
Production and sales
| Quarter | Total production | Model S sales | Model 3 sales | Model X sales | Total sales[a] | In transit[b] | Source |
|---|---|---|---|---|---|---|---|
| Q1 2015 | 11,160 | 10,045 | 10,045 | [83] | |||
| Q2 2015 | 12,807 | 11,532 | 11,532 | [84] | |||
| Q3 2015 | 13,091 | 11,597 | 6 | 11,603 | [85] | ||
| Q4 2015 | 14,037 | 17,272 | 206 | 17,478 | [86] | ||
| Q1 2016 | 15,510 | 12,420 | 2,400 | 14,820 | 2,615 | [64] | |
| Q2 2016 | 18,345 | 9,764 | 4,638 | 14,402 | 5,150 | [87][88] | |
| Q3 2016 | 25,185 | 16,047 | 8,774 | 24,821 | 5,065 | [89] | |
| Q4 2016[c] | 24,882 | 12,700 | 9,500 | 22,254 | 6,450 | [27][90] | |
| Q1 2017 | 25,418 | ~13,450 | ~11,550 | 25,051 | ~4,650 | [91] | |
| Q2 2017 | 25,708 | ~12,000 | ~10,000 | 22,026 | ~3,500 | [92][93] | |
| Q3 2017 | 25,336 | 14,065 | 220 | 11,865 | 26,150 | 4,820 | [94] |
- ^ Sales are only counted as sold when delivered to end customer and all paperwork is correct
- ^ Goods in transit are produced but not counted as sold until delivered
- ^ Sales by model do not add up to total, these are preliminary figures reported Tesla. Only total sales is final figure reported by Tesla, as breakdown by model was not provided in its Fourth Quarter & Full Year 2016 Update report.
Tesla deliveries vary significantly months due to regional issues such as ship availability and registration. Tesla does not follow the auto industry standard of monthly reporting.[95]Some monthly sales are estimated by media.[96]
SolarCity
On August 1, 2016, Tesla agreed to acquire SolarCity Corp. for $2.6 billion in stock. SolarCity is the largest installer of rooftop solar systems in the United States.[97] More than 85% of unaffiliated Tesla and SolarCity shareholders voted to approve the acquisition,[98][99] which closed on November 21, 2016.[100]
Model 3 rollout
In the week preceding the debut on July 7, 2017, of the Model 3 sedan, Tesla's stock-market value declined by more than $12 billion from a previous value of $63 billion. The loss was a result of a combination of factors that disappointed investors. Demand for Tesla’s luxurious existing models, Model S and Model X, did not grow in the second quarter.[101] Brian Johnson of Barclays said that customer deposits for the Model S and Model X fell by $50 million, potentially indicating that Tesla's introduction of the Model 3 could be adversely affecting their sales. Tesla predicted that luxury sales would reach 100,000 per year, below some analysts' expectations.[102]
Investors expressed concern about Tesla's plans for execution and competitive risk, as Volvo committed to eliminate its petroleum-only vehicles by 2019.[101] Johnson claimed that "Tesla will face intense competition by the next decade."[103]
Morningstar analyst David Whiston foresaw a revised, slower timetable for the Model 3 and a company acknowledgement of problems with building battery packs for its cars. In 2016 Musk predicted 100,000 Model 3 units would be sold in 2017, but that production may reach only 20,000 by December. Axel Schmidt, a managing director at consulting firm Accenture, said that Tesla’s problems with Gigafactory 1 prove that increasing Model 3 production "remains a huge challenge".[103]
As of October 2017, Tesla reported delivery of 220 Model 3s, acknowledging this was "less than anticipated due to production bottlenecks".[104]
In early November 2017, Musk advised investors of a production delay that was primarily due to difficulties with the new battery that would allow Tesla to significantly reduce the manufacturing cost of the Model 3. The company was having difficulties with robots on the assembly line[105] but the most serious issue was with one of the four zones in the battery, caused by a "systems integration subcontractor", according to Musk.[106] "We had to rewrite all of the software from scratch for the battery module", he reported.[107] He assured investors that Tesla had "reallocated" top engineers to work on achieving a solution. By that time, Jon Wagner, director of battery engineering, had left the company.[108]
Musk postponed the target date for manufacturing 5000 of the vehicles per week from December 2017 to "sometime in March" 2018.[105] When asked when the company would reach a production level of 10,000 units per week, he declined to speculate.[107][109] An analyst with Cowan and Company commented that "Elon Musk needs to stop over promising and under delivering".[110]
On November 21, 2017 Bloomberg stated that "over the past 12 months, the electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour)".[111]
Strategy
Tesla aims to disrupt the automotive industry by creating many innovative pieces that fit together; this strategy was called "complex coordination" by Tesla investor Peter Thiel.[112] Its marketing, production, sales and technology strategies all are notably different from its competitors.
Tesla's automotive strategy is to emulate typical technological-product life cycles and initially target affluent buyers. It would then move into larger markets at lower price points.[33][113] The battery and electric drivetrain technology for each model would be developed and paid for through sales of the earlier models.[33][114] The Roadster was low-volume and priced at US$109,000. Model S and Model X targeted the broader luxury market. Model 3 is aimed at a higher-volume segment.[34][115] This business strategy is common in the technology industry.[116] According to a Musk blog post, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."[117]
Tesla's production strategy includes a high degree of vertical integration (80% in 2016 according), which includes component production and proprietary charging infrastructure. The company operates enormous factories to capture economies of scale. Tesla builds electric powertrain components for vehicles from other automakers, including the Smart ED2 ForTwo electric drive (the lowest-priced car from Daimler AG), the Toyota RAV4 EV, and Freightliner's Custom Chassis Electric Van. Vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers,[118] and focus on engine manufacturing and final assembly.[119][120]
Tesla's sales strategy is to sell its vehicles in company-owned showrooms and online rather than to use a conventional dealer strategy.[121][122]
Tesla's technology strategy focuses on pure-electric propulsion technology, and transferring other approaches from the technology industry to transportation, such as online software updates.[124] Tesla allows its technology patents be used by anyone in good faith.[125] Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly.[126] Tesla retained control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.[127]
Tesla Human Resources VP Arnnon Geshuri committed to bringing manufacturing jobs "back to California".[128][129] In 2015, Geshuri led a hiring surge about which he said; "In the last 14 months we've had 1.5 million applications from around the world. People want to work here."[130] Geshuri emphasizes hiring veterans, saying "Veterans are a great source of talent for Tesla, and we're going after it."[129][131][132]
Sales
Its top selling car is the Model S, with global sales of over 197,600 units between June 2012 and September 2017, followed by the Model X with almost 59,000 units sold between September 2015 and September 2017.[18][91][92][94] The Model 3 with 220 units sold during the third quarter of 2017.[94] The now-retired Roadster sold about 2,450 units.[133]
In 2016 BYD Auto was the world's top selling plug-in car manufacturer with 101,183 units sold, followed by Tesla with 76,243.[18][19] However, Tesla revenues ranked ahead with US$6.35 billion, while BYD notched US$3.88 billion.[134]
Also in 2016, the company sold US$1 billion worth of cars in China, the world’s largest market for electric vehicles, and in October of the following year it reached an agreement with the Chinese government to build a factory in Shanghai.[135]
In July 2017 Tesla said their vehicles had traveled 5 billion mi (8 billion km).[136]
As of October 2016, Tesla operated about 260 galleries or retail locations in the United States.[137] In June 2016, Tesla opened its first store-within-a-store: a small outpost within the Nordstrom's department store at The Grove shopping mall in Los Angeles.[138] In 2017, Tesla opened retail locations in Dubai and South Korea.[139]
In August 2015, Tesla launched a revamp of its stores to include interactive displays focused on safety, autopilot, charging network and motors.[140]
In 2017 Tesla had a US$52 million marketing budget and used a referral program and word of mouth to attract buyers.[141][142]
US dealership disputes
Tesla operates stores and galleries[143][144]—usually located in shopping malls—in many U.S. states. However, customers buy vehicles only from the Tesla website.[145][146][147][148] The stores serve as showrooms that allow people to learn about the company and its vehicles. Some galleries are located in states with restrictive dealer protection laws that prohibit discussing price, financing, and test drives, as well as other restrictions.
Tesla's strategy of direct customer sales and owning stores and service centers is different from the standard dealership model in the global vehicle marketplace. Tesla is the only automaker that sells cars directly to consumers; all others use independently owned dealerships[149][150] although many provide online configuration and financing.[151][152][153] 48 states have laws that limit or ban manufacturers from selling vehicles directly to consumers,[154][155][156] and although Tesla has no independent dealerships, dealership associations in multiple states have filed lawsuits over Tesla's sales practices.
Countries other than U.S. do not protect dealers. The Federal Trade Commission recommends allowing direct manufacturer sales,[157][158]which analysts believe would save consumers 8% on average.[159][160]
Used vehicles
Under a buyback program called the Resale Value Guarantee available in 37 U.S. states, a Tesla Model S sold before July 1, 2016 included the right to return it after three years with reimbursement of 43% to 50% of its initial price. This reimbursement matched the trade-in values of competitive German luxury cars of that age. In addition to maintaining the resale value, Tesla hoped to secure a supply of used cars to refurbish and re-sell with warranty. According to Automotive News, the profit margin on used car sales in the U.S. is about triple that on new cars, and Tesla's direct sales would allow it capture resale profits.[161] Tesla ended the program in 2016 although they retained the Residual Value Guarantee on leased vehicles.[162][163]
In May 2015, Tesla started selling refurbished Model S cars in the U.S.[164] and within a month sold 1,600 cars.[165] As of July 2017, over 80 used Model S and Model X cars were for sale, with either a four-year, 50,000-mile warranty[166] or a two-year, 100,000-miles warranty for vehicles above 50,000 miles.[167][168] As of September 2015, similar programs existed in Canada,[169] Austria,[170] Belgium,[171] Denmark,[172] France,[173] Germany,[174] Britain,[175] Netherlands,[176] Norway,[177] Sweden[178] and Switzerland.[179]
Technology
As a vertically-integrated manufacturer, Tesla has had to master multiple technology domains, including batteries, electric motors, sensors and artificial intelligence.
Batteries
Unlike other automakers, Tesla does not use individual large battery cells, but thousands of small, cylindrical, lithium-ion commodity cells like those used in consumer electronics. It uses a version of these cells that is designed to be cheaper to manufacture and lighter than standard cells by removing some safety features. According to Tesla, these features are redundant because of the advanced thermal management system and an intumescent chemical in the battery to prevent fires.[180] Panasonic is the sole supplier of the cells and cooperates with Tesla in the Gigafactory 1's '21-70' cells.[181]
In February 2016, Tesla battery costs were estimated at US$200 per kWh.[119] Tesla indicated later in 2016 that their batteries cost less than $190/kWh.[182] Still later that year Argonne Labs estimated $163/kWh at a production rate of 500,000 packs per year.[183][184]
The batteries are placed under the vehicle floor. This saves interior and trunk space but increases risk of battery damage by debris or impact. The Model S has 0.25 in (6.4 mm) aluminum-alloy armor plate.[185] CTO Straubel expected batteries to last 10–15 years,[186] and discounts using electric cars to charge the grid (V2G) because the related battery wear outweighs economic benefit. He also prefers recycling over re-use for grid once they reach the end of their useful life for vehicles.[187][188] Since 2008, Tesla has worked with ToxCo/Kinsbursky to recycle worn out RoHS batteries, which will be an integral part of GigaFactory.[189][190][191]
Motors
Tesla makes electric induction motors with three phase, four pole AC and copper rotor.[192] Motors for the Model S and Model X are made at Tesla Factory, while motors for Model 3 are made at Gigafactory 1.
Autopilot
Tesla Autopilot provides semi-autonomous driver assist beginning in September 2014. Tesla replaced its sensors and software in 2016 (HW2). As of 2017, Autopilot included adaptive cruise control, lane departure warning, emergency braking, Autosteer (semi-automated steering), AutoPark (parallel and perpendicular parking) and Summon (recalling the vehicle from a parking place).[193][194] HW2 became HW2.5 with summer 2017 upgrade that included a second GPU and a driver-facing camera.[195]
HW2 includes eight cameras and twelve ultrasonic sensors, in addition to forward-facing radar.[196]
At the end of 2016, Tesla expected to demonstrate full autonomy by the end of 2017.[197][198] In April 2017 Musk predicted that in around two years drivers would be able to sleep in their vehicle.[199]
Tesla glass
In November 2016, the company announced the Tesla glass technology group. The group is developing glass for use in SolarCity roof tiles that were announced in October 2016. The group also manufactures the roof glass for the Tesla Model 3.[200]
The glass roof tiles which contain an embedded solar collector are one third lighter than standard roof tiles.
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