Tesla, Inc. (NASDAQ:TSLAC) has a plan. It wants to begin producing as many as 5,000 cars a week by the end of this year. Many of them would be Model 3 sedans priced at about $35,000 each. That would make Tesla a company that produces cars for the masses – not just the wealthy.
That’s not all. CEO Elon Musk has a goal of becoming a sustainable energy company that not only sells electric cars but also market solar power and manufactures large batteries to store that power at home and at work.
Currently Tesla’s market value is close to that of Ford Motor Co. (NYSE:FD). Tesla’s share price has gone up 50% since acquiring SolarCity Corp. which could be a good thing since the company may need to raise money to ramp up to the kind of production levels to which it aspires.
Musk told analysts Wednesday that although the company didn’t really need to raise money, it made sense since getting production up for the Model 3 would drop the company’s cash level “close to the edge.”
Shares were down about 5% Thursday following Wednesday’s reported mixed quarterly results. In addition, Tesla said it expected to deliver about the same number of vehicles in 1H 2017 as it did in 2H 2016.
Tesla told shareholders margins declined for 3 reasons: First were delays in updates to the autopilot software; second, unfavorable foreign exchange rates; and third, an increase in the sale of fixed assets resulting from the company’s efforts to prepare for Model 3 production.
Also weighing on Tesla – or at least on the mind of Elon Musk – efforts by employees in the Fremont factory to unionize. According to Musk bringing in the UAW would be all disadvantages with no upside.
Musk says Tesla’s factory has about half the accident risk of the rest of the automotive industry and Tesla employees are the highest paid in the space. Musk ended his remarks about unionization Wednesday during the earnings call by saying he did not believe it was likely Tesla workers would end up joining the union.
The Charging Stations Factor
Tesla’s goal to be a mainstream seller of moderately-priced electric cars depends in large part on the public’s acceptance of electric vehicles as standard transportation. And that depends on the availability of “fueling” stops, aka charging stations. Absent charging stations, owners are limited to day trips to and from their homes.
Actually, charging opportunities are there. Ease of use is not for much of the “charging” world. Tesla is something of an exception since it owns and operates its entire charging network. And the news just got better. Tesla recently announced that it plans to double the number of its Supercharger locations by the end of 2017 – just in time to accommodate all those Model 3 sedans that will be on the road by then.