CEO Elon Musk, usually a relentless optimist, admitted to the huge hurdles ahead when he spoke at the National Clean Energy Summit last week in Las Vegas.
Tesla Motors has rightly won admiration for its vision and its marketing savvy. But now it’s going to have to meet a new challenge, and this one can’t be faced online or in the press – it must increase production of the new Model S at unprecedented speed, and any mistakes could be fatal. Tesla has 12,200 orders on its books, and plans to fill 5,000 of those by the end of the year.
Several stock analysts noted the Herculean nature of that goal a couple of weeks ago, after Tesla announced major losses connected to the shift into production mode, and our colleagues at Gigaom described the situation eloquently on Monday, pointing out that the next six months will be critical for the eight-year-old company. As Tesla performs its steep scaling-up, any major recalls would be nightmarish, but ramping up more slowly might mean delays in delivery, which could also be disastrous.
CEO Elon Musk, usually a relentless optimist, admitted to the huge hurdles ahead when he spoke at the National Clean Energy Summit last week in Las Vegas. “The challenge that Tesla faces over the next few months is scaling production enough to achieve a certain gross margin on our product so we can be cash flow positive. That’s extremely important. If we’re unable to do that, we’ll enter the grave yard with all the other car company startups of the last 90 years. It’ll definitely be a very tough road over the next 6 months. We can’t afford to make a lot of mistakes. If we don’t make too many mistakes then we’ll get to that period and we’ll be able to bring out larger volume cars that are more affordable.”