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Tesla did not invent the electric car – it actually happened in 1891. Instead, she did something a lot more interesting – she made the electric car cool. When Tesla unveiled the Roadster in 2006, it began a wave of changes in the automotive sector that continues today: virtually all major global automakers are now considering deploying electric vehicles in volume in years to come. come. In 2010, Tesla became the first publicly traded automaker to emerge in the United States in 54 years and has generated incredible returns for shareholders since, creating one of the world's most valued car brands.
Without a doubt, Tesla has changed the face of the auto industry, but how does it make money?
In short, they do not do it. Throughout its history as a publicly traded company, Tesla has never been profitable on an annual basis and has only recorded a few profitable quarters in its history.
However, Tesla has rapidly increased its sales by recording annual sales of $ 21 billion in 2018. This represents an increase of nearly 7 times in the last 5 years and 183 times since its publication. Today, Tesla generates 93% of its revenue from auto sales and about 7% from energy production and storage.
How did Tesla achieve such impressive growth? They had a plan.
The Tesla Master Plan has 4 steps. 1) Create a high-end, expensive, low-volume vehicle, 2) THEN use this money to develop a medium-volume car at a lower price, 3) THEN use this money to create an affordable, high-volume vehicle, and 4 ) provide solar energy.
For about a decade, Tesla executed each step of its blueprint one by one, starting with the production of its high-end, low-volume Roadster sports car in 2008. Four years later, Tesla began delivering its luxurious Model S sedan. Tesla started delivering its Model X luxury SUV 3 years later, after several delays. Three years later, Tesla finally introduced its model 3 general public sedan. In January 2019, Model 3 adopted the Model S to become the best-selling electric car in the history of the United States.
At the same time, in 2016, Tesla merged with SolarCity, completing the fourth part of its master plan, enabling it to sell its PowerWall energy storage units as well as its Tesla solar panels and vehicles, thus enabling customers to To fully power their home and their vehicles. via solar energy.
Despite Tesla's incredible growth over the past decade and the completion of its initial master plan, threats remain on the horizon.
Traditional automakers are aggressively entering the electric vehicle market, especially on the high end that Tesla dominated up to now, with Audi, Porsche, Mercedes, Volvo, Jaguar and other new vehicles in coming years. Simultaneously, Tesla began to lose the benefit of the US electric vehicle tax credits starting in 2019. As competition enters the US market through the electric vehicle tax credit, its already unprofitable business will be under increasing pressure on its margins which could affect its investment in future growth in a capital-intensive business such as auto manufacturing.
Tesla will need to find a lot of cash over the next few years to fund the already announced (and highly anticipated) projects like the Model Y, the Semi Tesla, the New Tesla Roadster, the solar roof and the construction of the Chinese gigafactory.
In addition, Tesla faces a stringent regulatory scrutiny from the SEC, dating back to the fraudulent CEO tweets, Elon Musk, that the company had funding to become private at $ 420. This incident, to which is added another tweet that misrepresents estimates of future production, encourages regulators to monitor Musk and Tesla very closely.
At best, exchanges with regulators are distracting as the company tries to dominate the electric vehicle market before its competitors can enter. At worst, this could eventually deprive the company of its CEO and personify his brand, which could compromise its incredible growth.
Time will tell if Tesla can overcome these challenges and other important challenges that the company faces today and one day achieve consistent profitability. Be that as it may, it is indisputable that Tesla has achieved its goal of accelerating the transition to sustainable transportation.
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