This week, Tesla Motors officially unveils its massive new Gigafactory 1 at a grand opening event on July 29, The ultimate objective of the first Gigafactory is simple, but it is not for the faint of heart. Battery costs are the most expensive component of electric vehicles, and the multi-billion dollar Gigafactory aims to add scale, vertical integration, and other efficiencies together to bring lithium-ion battery costs down.
Cheaper battery packs could make electric vehicles competitive with traditional gas-powered vehicles — and if that happens, it is a game-changer for the auto industry. That said, here is what we know about the new Tesla Gigafactory and its possible impact.
The Gigafactory will take up 5. While the Gigafactory will certainly be one of the largest factories by volume, it will be hard to compete with Boeing for first place there. Tesla expects this to happen through vertical integration, adding economies of scale, reducing waste, optimizing processes, and tidying up the supply chain.
Tesla CEO Elon Musk has also stated that the company is changing the form factor of the batteries away from the industry standard. Lithium-ion cells used for notebook computer batteries are typically produced in an cell format 18mm x 65mmbut Tesla will produce them in a cell format 20mm x 70mm.
This means it could produce up to GWh of battery cells, and GWh of completed battery packs. Musk says the current factory size will be sufficient for this ramp-up.
We previously showed the extraordinary amounts of materials needed to build a Tesla Model S. This has created a significant rush for suppliers of these raw materials. Tesla aims to sellcars in If it hits the mark, it will be a big milestone for the electric vehicle market. To put that number in perspective, the total amount of sales all-time for the three most popular EV models Leaf, Volt, Model S added up to only aboutcars as of December Tesla is still a small auto manufacturer — but if it meets its stated production goal ofvehicles inthat will be comparable with brands like Chrysler, Land Rover, Isuzu, Volvo, and Lexus.
Even taking into account coal power and pollution, driving a Tesla is already far better for the environment in most states. It will employ 6, people, and it will have a state-of-the-art recycling system to make use of old battery packs. This interactive visual shows the countries best prepared for the shift to autonomous vehicles, as well as the associated societal and economic impacts.
For the past decade, manufacturers and governments all over the world have been preparing for the adoption of self-driving cars—with the promise of transformative economic development.
As autonomous vehicles become more of a looming certainty, what will be the wider impacts of this monumental transition? The graphic above uses the Autonomous Vehicles Readiness Indexwhich details the five levels of automation.
Level 0 vehicles place the responsibility for all menial tasks with the driver, including steering, braking, and acceleration.
In contrast, level 5 vehicles demand nothing of the driver and can operate entirely without their presence. Today, most cars sit between levels 1 and 3, typically with few or limited automated functions. Both feature a full range of self-driving capabilities—enabling the car to steer, accelerate and brake on behalf of the driver. The 20 countries were selected for the report based on economic size, and their automation progress was ranked using four key metrics: technology and innovation, infrastructure, policy and legislation, and consumer acceptance.
The Netherlands and Singapore rank in the top three for infrastructure, legislation, and consumer acceptance. Singapore is currently testing a fleet of autonomous buses created by Volvowhich will join the existing public transit fleet in India, Mexico, and Russia lag behind on all fronts—despite enthusiasm for self-driving cars, these countries require legislative changes and improvements in the existing quality of roads.With a pledge of future profitability and an apology for past bad manners, Tesla CEO Elon Musk was upbeat in his conversation with analysts during a second-quarter conference call Wednesday.
Tesla shares soared as much as 11 percent in after-hours trading. The stock has been under pressure for some time as investors have worried about the cash the company was burning and whether it would be able to sustain its profitability.
The electric car maker's second-quarter loss was wider than analysts expected, but the company backed its prior forecast that calls for profitable third and fourth quarters. He added that recessions, or force majeure events could derail the plan but the goal is to be achieving positive GAAP income and cash flow "every quarter from here on out. Increased rates of production, improving margins, and cost cutting is helping Tesla hit its goal. One big step it made was completing its major cost restructuring plan in the second quarter, the company said.
This quarterly update is a crucial one for Tesla. Investors have growing concerns about Tesla's ability to be consistently profitable, reported quality problems with its cars, and overall demand for the Model 3, which is the company's biggest bet by far.
Tesla said it produced 53, vehicles in the second quarter and delivered 22, Model S and Model X vehicles and 18, Model 3 vehicles, totaling 40, deliveries. The company said in July it was able to repeatedly hit its target of producing 5, Model 3 vehicles per week. Production, though, is many months behind schedule and the company has resorted to setting up assembly lines in temporary tent structures.
Tesla is now aiming for a 6, vehicle per week ratewhich it hopes to achieve by the end of August.
By year-end it hopes to ramp up to a rate of 10, per week. Musk said the company is still aiming to produce 1 million cars per year bybut that a number closer tooris more likely. Tesla's total automotive gross margins rose slightly, fueled in part by a the fact that Model 3 gross margins turned slightly positive in the second quarter, over the previous quarter, but were down over the second quarter of last year.
Tesla expects Model 3 margins to be 15 percent in the third quarter, still lower than the 25 percent target Tesla had set for the car. Tesla expects to produce 50, Model 3s next quarter, and deliveries should exceed that number. The Model 3, a midsize sedan, is arguably Tesla's most important product.
Tesla is experiencing a painful year — here's everything that has gone wrong so far
Tesla is betting the sedan will help the company transition from a niche maker of high-end electric vehicles to a mass manufacturer. Many analysts think the company will have to raise fresh capital by the end of the first quarter of But Musk has not wanted to raise capital. On Wednesday, he said he wants to focus on reducing Tesla's debt, and reiterated that he has no plans to raise capital "at any point. He said the company will fund its China factory through a local Chinese bank.
Tesla, Inc. Porter Five Forces Analysis
Tesla seems to have taken another step toward getting its finances in line by recently hiring a new chief accounting officer. Despite turning its attention toward improving its financial health, Tesla is still making investments in tech.
Musk said on the call that a Tesla is very close to finishing a custom-built on-board chip for autonomous driving that would replace those currently offered by suppliers such as Nvidia. This new system will cost about the same as those currently installed in Tesla vehicles but will be far more powerful.
Tesla is experiencing a painful year — here's everything that has gone wrong so far
Musk's behavior showed more restraint on the conference call than he had last quarter. Tesla took its first questions from two analysts whom Musk had dismissed three months earlier, when the company reported first-quarter results. On that earlier call, Musk had referred to the questions that the analysts were asking as "boring, bonehead questions," and as "dry," and chose instead to take several questions from a retail investor via YouTube.
Sign up for free newsletters and get more CNBC delivered to your inbox. Get this delivered to your inbox, and more info about our products and services. All Rights Reserved. Data also provided by. Skip Navigation. Markets Pre-Markets U. Key Points.Tesla had a wild ride in The company is worth more than ever, passing Ford and Fiat Chrysler Automobiles in market capitalization and threatening General Motors.
But the "production hell" of a sluggish Model 3 roll-out has tested the patience of customers and investors. And Tesla doesn't have enough money in its reserve to sustain its current cash burn. Relative to its auto-industry "peers," Tesla has a pitiful amount of available cash. The carmakers that Tesla has challenged in market capitalization in — General Motors, Ford, and Fiat Chrysler Automobiles — have each amassed war chests. Tesla is also currently burning through over a billion per quarter.
If we just go by cash and exclude other financing instruments, such as Tesla's revolving credit lines, the company can't make it through It's worth noting that Tesla is running thin on cash at a time when the US economy is at full employment and the US auto market is running near an all-time sales high.
Do the math: Tesla needs more money. And it will likely obtain that funding through another capital raise. It's past two raises were a return to Wall Street to sell more stock; and a first foray into the junk-bond debt markets. Each new raise, however, highlights Tesla's poor execution on the manufacturing front.
FCA, Ford, and GM also spend a billion per quarter, but they manage to produce millions of vehicles worldwide. Tesla produces a fraction of that. But while that would be cause for celebration at Tesla, attention would then turn to how much money Tesla is making on the Model 3.
Mass-market sedans have notoriously skinny profit margins and have plummeted in popularity as consumers have turned to crossover SUVs. Tesla's factory in Fremont has a theoretical manufacturing capacity ofvehicles annually, although when it was jointly operated by Toyota and GM in the s, it never hit that mark.
Still, it topped out at overTesla is now 14 years old and init will finally rollvehicles off its assembly line. CEO Elon Musk said that in it would rollThere's almost no chance that Tesla will hit that mark in In fact, even if the company were able to build 5, Model 3's per week, and add that output to anotherModel S and X vehicles, production would only be aboutfor This is ridiculous.
Tesla admitted when the Model 3 fell well short of production that "bottlenecks" at the company's Gigafactory battery plant in Nevada were to blame. We'll take Tesla at its word, but the true bottleneck is and always has been at Fremont. No other automaker in the world would be sitting on hundreds of thousands of pre-orders for a single vehicle and struggling to hit production targets.
The reason that we aren't seeing far more Teslas on the road is simply because Tesla is stubbornly refusing to admit that it's bad at building cars. I can't figure out why Musk won't just throw in the towel and hire somebody else to build the car for him. When carmakers such as BMW can't meet demand with their existing capacity, they bring in a contract manufacturer to take up the slack.
Fixing Fremont has to be Tesla's second-highest priority innext to avoiding running out money. Tesla is stupendously good at keeping its story going. It does this by staging epic new-product reveals that thrill the loyalists and refuel the company's narrative.By Everwise September 11, Qualtrics recently gathered HR leaders for a weeklong series of webinars focused on recruiting, employee engagement, talent development, and leadership.
In one of the first TalentWeek webinars, Employee Engagement to Accelerate Business ResultsLouis Efron and Juliana Bednarski of Tesla spoke about how their organization is incorporating employee engagement into its core business strategy. Additionally, higher employee engagement directly correlates to better customer experience. Efron and Bednarski shared their recent success measuring employee engagement and leveraging that engagement to empower employees and strengthen Tesla as a whole through their Tesla survey.
Based on their experience, Efron and Bednarski provided the following tips to better understand employee engagement in your company and use that as a platform to improve your own workplace:.
Enthusiasm from leadership goes a long way in garnering support at every level of the organization. Tesla did not use a one-size-fits-all communication strategy to announce Tesla to employees.
Tesla had 18 questions 16 with a scale answer, 2 open-ended answers. It took an average of 3 minutes to complete and was mobile enabled so people could take the survey anywhere. Anonymity is critical for employees to feel like they can be honest. Tesla communicated upfront that surveys would be anonymous and carried this through later data presentation and analysis. Tesla sent participation updates while the survey was active in order to drive participation. It then released results organization-wide within 2 weeks of closing the survey along with guidance as to how to interpret the data.
Tesla created a dashboard to present the data in an easily digestible format e. Tesla had planned for designated HR Business Partners to moderate team conversations regarding the data, but managers were so enthusiastic to lead follow-up action planning sessions that the original plan was not feasible.
Moving forward, Tesla plans to continue building on its first round of Tesla surveys. Everwise connects employees with the people, resources and feedback they need to be more productive and successful at every stage of their career. Based on their experience, Efron and Bednarski provided the following tips to better understand employee engagement in your company and use that as a platform to improve your own workplace: 1.
Get people on board using a top-down approach Enthusiasm from leadership goes a long way in garnering support at every level of the organization. Communicate about your engagement survey using the same channels that you normally would Tesla did not use a one-size-fits-all communication strategy to announce Tesla to employees. Eliminate barriers to participation Tesla had 18 questions 16 with a scale answer, 2 open-ended answers.
Keep it anonymous Anonymity is critical for employees to feel like they can be honest. Be timely and transparent Tesla sent participation updates while the survey was active in order to drive participation. Make the data accessible Tesla created a dashboard to present the data in an easily digestible format e. Be Flexible Tesla had planned for designated HR Business Partners to moderate team conversations regarding the data, but managers were so enthusiastic to lead follow-up action planning sessions that the original plan was not feasible.
About the Author Everwise connects employees with the people, resources and feedback they need to be more productive and successful at every stage of their career.
Request demo.Every time you mention out-of-box thinking, you think about Tesla. And every time you seek a model for organization analysis…well, yes, you are welcome to consider Tesla. Tesla is an unprecedented attempt to transform the global automotive industry and to make it economical, environmentally friendly, and yeah, trendy.
But events started to develop much faster inwhen Elon Muskan investor, manufacturer, and business magnate, joined the company. Elon Musk is, in fact, a business genius; and, hopefully, one of the future tutorials will be devoted to his leadership phenomenon. These factors are:. Therefore, Tesla should consider the following vulnerabilities:.
Of course, a number of opportunities open up to the company:. Finally, Tesla should consider a bunch of external factors that can be potentially dangerous for its development. Below in this article, we will reach the depth of the Tesla business, competitors and supply chain.
Presently, Tesla is at the crossroads of its business development. On the one hand, the company has so many innovative ideas, and consequently an ambitious strategic vision. According to Hoium, Musk needs his own operations genius to match between the ambitious strategic vision and performance. It is crucial in resent business terrain, which is characterized by a complex interplay of numerous internal and external factors.
However, the takeaway message is that your company cannot be successful unless you have your own Tim Cook, a person who has a clear understanding of business realities and makes sure that these realities bring your vision to a new level rather than hinder your efforts. Writing a business case study can be quite a challenge. But you should not worry about this, as long as you have a bunch of experienced tutors who will give you a helping hand. Crystal Renner on September 27, Share your task and the right geek will check it immediately.
Learn More.Since then, the company has won awards for its vehicles, built an enthusiastic fanbase, and watched its market capitalization approach and at times top those of General Motors, Ford, and Fiat-Chrysler.
Part of the company's success can be attributed to Musk's rare gift for storytelling. Since taking over as the company's chief executive inhe's outlined a vision for the company that extends beyond selling cars to transforming global energy grids. Investors have shown faith in Musk, which is why Tesla has been able to raise money without much difficulty despite posting consistent deficits.
But Tesla has faced a number of challenges this year, including concerns over its finances, ability to build cars at scale, and public comments attributed to Musk and Tesla. Now, the company is at an inflection point.
The automaker reported last week that the third quarter was the most profitable in its history, beating Wall Street's expectations. In upcoming quarters, Tesla will be under pressure to prove that it can maintain profitability and stay out of trouble with regulators as it ramps up Model 3 production, introduces new vehicles, and builds a factory in Shanghai. Have a Tesla news tip?
The hack, which was brought to Tesla's attention by the cybersecurity startup RedLock, also reportedly exposed some of Tesla's proprietary data related to mapping, telemetry, and vehicle servicing. In March, Tesla issued the largest recall in its history.
The recall involved power-steering systems inModel S sedans.
Tesla said five bolts responsible for holding the power-steering motor in place could corrode, break, or come loose, which could result in the loss of power steering. But the company also said the problem was rare and most likely to happen in colder areas that use a specific kind of salt to lessen the amount of ice and snow on the road.
According to Tesla, the problem was only relevant to Model S vehicles built before April and had affected just 0. The driver, Walter Huang, died after being taken to the hospital. Autopilot, Tesla's semi-autonomous system, was engaged during the accident, and Huang's wife said he had complained about the system not working properly near the area where the crash occurred.
Tesla released a statement blaming Huang for the accident. Huang was not paying attention to the road, despite the car providing multiple warnings to do so. While Tesla pointed to statistics that indicate fatal accidents are 3. Four days after the accident, the National Transportation Safety Board announced an investigation. Tesla helped the agency retrieve and interpret data from the vehicle's logs, but the company clashed with the agency over Tesla's decision to reveal information about the crash on its blog.
It can take months for the NTSB to release a report about an investigation, and the agency doesn't like outside parties to release information that hasn't been approved by the agency. As a result, Tesla is no longer a party to the agency's investigation, though it will continue to assist the agency.Porter Five Forces Analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry.
Tesla, Inc. Over the years Tesla, Inc. In his revolutionary article - "Five Forces that Shape Strategy", Michael Porter observed five forces that have significant impact on a firm's profitability in its industry. These five forces analysis today in business world is also known as -Porter Five Forces Analysis. The Porter Five 5 Forces are. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition.
Porter Five Forces focuses on - how Tesla, Inc. Managers at Tesla, Inc. New entrants in Auto Manufacturers - Major brings innovation, new ways of doing things and put pressure on Tesla, Inc.
All most all the companies in the Auto Manufacturers - Major industry buy their raw material from numerous suppliers. Suppliers in dominant position can decrease the margins Tesla, Inc. Powerful suppliers in Consumer Goods sector use their negotiating power to extract higher prices from the firms in Auto Manufacturers - Major field. The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Auto Manufacturers - Major.
Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible. This put pressure on Tesla, Inc. The smaller and more powerful the customer base is of Tesla, Inc. When a new product or service meets a similar customer needs in different ways, industry profitability suffers. For example services like Dropbox and Google Drive are substitute to storage hardware drives.
The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry.
If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. This competition does take toll on the overall long term profitability of the organization. By analyzing all the five competitive forces Tesla, Inc. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity.
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