Making sense of Tesla: An investor's guide to a unique company (Part 5 of 7)
Tesla is ramping up production
Tesla began with a small number of vehicles before 2013 and sold around 22,000 in 2013. What drove this increase was the introduction of the Model S in 2012. Since then, Tesla has been ramping up production.
The above chart is from the investor update. It provides an overview of where management wanted to take the company in the next four years. From the first quarter investor letter, management is on track, with first quarter production of 7,535 vehicles, delivery of 6,457 Model S vehicles, and expansion into Asia with first deliveries into China. Tesla claims to be on track for 35,000 deliveries in 2014.
Tesla Model X
Tesla announced the Model X in 2013.
It’s a crossover-type SUV with all-wheel drive. It will seat seven adults and price within the range of the current Model S, according to the Tesla annual filing. The goal presented in this document was 20,000 per year, with the commercial introduction in 2015. This would put annual production to 55,000 per year.
The introduction of the Model X is due to the growth of the crossover market. As we’ve discussed in prior articles of this series, the U.S. automobile market is 51% trucks and 49% cars. In between these is the crossover, an SUV-like vehicle built on the chassis of a car. According to motorintelligence.com, this segment grew at 19% year-to-date 2014 versus overall automobile market growth of 5%.
Tesla Gen III
Tesla also presented the next product, named the Gen III. The Gen III is to be produced at the Tesla factory. The goal of the Gen III is to lower the price point of Tesla’s product and produce it at greater volumes than the Model S. The goal is to have this product available in approximately 2017.
Investors can look at the category leaders of General Motors (GM), Toyota (TM), Ford (F), and Volkswagen or invest in the segment via the exchange-traded fund CARZ.
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