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Is Telsa Racing Towards Trouble?


Tesla is currently a company that is seemingly in trouble. All signs are pointing towards a downward spiral: as Telsa is securing assets, losing money, and has an increased inventory that keeps piling up.

Like most companies that lose momentum, there doesn’t seem to be only one factor behind Telsa’s woes. First and foremost, there isn’t a huge market right now for car buyers willing to purchase a high-priced vehicle that can’t make a long haul without needing a pit stop to charge up. A lowered price in gasoline is also a problem that isn’t helping Telsa’s current situation.

Adding fuel to the fire is Telsa’s battery technology. The auto manufacturer never kept their technology a secret, and there were automakers who bought into the company’s technology early on, to prevent having to increase their development investment when it came to battery packs. Take into account that Audi has revealed its plans of entering the electronic vehicles market, and Telsa should have even more reason to worry; with luxury car buyers potentially looking more towards an Audi model, then a Telsa.

There’s also the issue of distribution to take into account. While the idea was for the company to be in control of their retail area, and allow for an upscale experience, the strategy has lost money. In the past, auto makers have not been successful with company stores, taking into account that BMW used this very same distribution process in the 70s.

MSN reports that while perhaps Tesla initially thought that if the factory store idea was successful for Apple, then it would be for them too. Still, the fixed costs associated with running these stores compare greatly to those of a car dealership. Tablets, smartphones, laptops, and accessories don’t require the space and maintenance that a dealership does. In addition, the training of sales staff, service operators, as well as employees knowledgeable for the financing departments turn this into a whole different ball game. It requires a huge investment, and that isn’t including the vehicle inventory required on-site.

What does Telsa’s future hold? With all these issues and barriers, only time will tell. Like with everything else in the business world, a new focus, strategy, and direction may help the company turn things around.