Why is Tesla losing money?

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The content of the article:

  • Under the auspices of a scientist
  • The first steps
  • First difficulties
  • Age of the Mask
  • Tesla features
  • Excess demand creates losses


In 2016, the main news in the automotive world was the protracted crisis at Tesla, which suffered losses for more than a year in a row. Then one successful quarter - and again losses in the amount of $ 620 million.

What is the secret of the worldwide popularity and equally phenomenal loss-making of the innovative company?

Under the auspices of a scientist

Two engineers and complete opposites - Mark Tarpenning and Martin Eberhard - were introduced by a mutual friend. They played in a music group together, provided consulting services and developed various business ideas, such as an e-book company.

After the divorce, Eberhard decided to please himself with a new sports car, but they all consumed more than 8 liters per hundred, which forced the engineer to think about an electric car. As he delved deeper into the matter, he stumbled upon AC Propulsion, which owned an experimental small electric car, the Tzero. When the engineer got behind the wheel, and the baby gave an acceleration comparable to Lamborghini, he realized that this is far from a toy - such cars have a right to exist.

Mark Tarpenning, in turn, tried to understand why such a promising direction of production has not yet been implemented by large automakers. They saw the main problem in the underdeveloped battery industry, with the main focus being on lead-acid batteries. Whereas lithium-ion batteries become 7% more efficient each year, cheaper to manufacture and have much more potential. Thanks to them, the electric motors will not only provide an impressive torque when squeezing out the gas, but also, using regenerative braking, will allow the battery to be fed with energy.

In the process of thinking through a business plan, calculating the necessary funds, presenting at various events, the partners realized that they would not be able to create a car from scratch. The engineers' choice fell on a compact British-made Lotus Elise that was light enough to fit a battery. Now all that remained was to find an investor.

Back in 2001, Martin Eberhard met a businessman, engineer and inventor Elon Musk at a conference of the Martian Society.

After a two-hour presentation, the young man, not without a grain of salt, agreed to invest $ 7.5 million in the new company and joined its board.

Tesla's first steps - the story of the beginning of the company

The first roadster of the newly minted automaker was born in agony. Eberhard and Tarpenning were full of ideas, but they had absolutely no knowledge of how to implement them. It turned out that remaking the Elise body to fit Tesla's technical ideas is as difficult as creating a new model. The sketches of the future car, drawn by Eberhard's hand, were so ridiculous that the Lotus management was afraid to disgrace their brand with an agreement with crazy inventors.

Eberhard was helped by his friend, industrial designer Bill Moggridge, who put the idea into concrete, attractive forms. And on the Christmas holidays, all members of the Tesla board, with the exception of Elon Musk, who just became the father of twins, gathered at Eberhard's house and, by voting, chose the design of the future car model.

A huge number of guests were invited to the presentation of the roadster in June 2006 in Santa Monica, including Hollywood stars led by incumbent Governor Arnold Schwarzenegger. Eberhard, in contrast to the embarrassed and unknown at that time Elon Musk, shone on stage, describing the merits of the new car, and dozens of TV channels fought for an interview with him.

Within 2 weeks after the presentation, the company had over a hundred orders for electric vehicles, and the roadster itself received the Global Green 2006 Product Design Award from Mikhail Gorbachev.

First difficulties

From the very first days of the start of production, Tesla was unable to meet its own release plans. The managers expected to have at least 500 copies for sale already in 2007, but in 2008 there were no deliveries either. It was necessary to decide: either to become pioneers in the electric car market, or to throw all efforts at bringing the model to perfection, eliminating numerous shortcomings.

Problems in production were associated with both disorganization and excessive idealism. The original plan was for Tesla to provide the chassis parts and Lotus to assemble them. This strategy looked quick and cheap. However, Tesla began to take on more and more, hundreds of nodes instead of the planned ten.

Elon Musk actively intervened in the production process, who considered that his role in the launch of the electric car was offensively underestimated.


He changed the level of the door sill, replaced the headlights and seats for exclusive custom made, requested more expensive material for the dashboard. Thus, the release dates were constantly shifted and disrupted due to sudden improvements. As a result, the company unexpectedly for itself discovered that instead of a couple of its own developments, it was forced to send hundreds of automotive components to an English assembler, further confusing Tesla's already complex financial affairs. The founding father and main developer of the first electric car, Martin Eberhard, was removed from the management, sent to oversee the production, and the other problems were joined by mutual lawsuits of the board members.

Age of the Mask

Since 2009, Elon Musk has taken over the management of the company as the main investor who has invested $ 55 million. One of his first decisions was the recall of 75% of the sold copies of the roadster. The owners complained about the unreliability of the design, even the "star" owner of the electric car, George Clooney, spent more than one hour on the sidelines due to breakdowns.

In the same year, the US government, which is actively supporting the environmental direction, provided a $ 465 million loan to develop Tesla. Consumers owe this injection to the S sedan with an improved drivetrain and better build quality.

Musk fundamentally changed his development strategy, reorienting production to mass sales. For this, the car had to become as budgetary as possible, environmentally friendly and reliable. Thus, it was necessary to reduce the cost from hundreds of thousands of dollars to thirty.

Tesla features

Different manufacturers have tried different batteries for electric vehicle prototypes. A distinctive feature of Tesla models are galvanic batteries, in which thousands of lithium-ion batteries form a single charging system. Such devices are used in household appliances, laptops and tablets, but for cars the company has made the production process cheaper, while reducing the weight of the product.

Despite the widespread opinion about the dangers of this kind of battery, numerous tests and years of use on Tesla cars show reliable protection against swelling, overheating, and ignition due to competent thermoregulation. And for the convenience of the driver and not to the detriment of the elegance of the car's appearance, the entire battery pack is located under the floor of the car, which also strikingly distinguishes Tesla models from similar electric vehicles.

The story with the creation of the engine is no less unique. The engineers of the company, honoring the memory of Nikola Tesla, took the development of the scientist himself as a basis.The classic liquid-cooled motor is powered by an alternating 3-phase 4-way current. The compact unit is lighter and more practical than a traditional combustion engine, and also makes it possible to eliminate the transmission from the design for the sake of direct drive. It was with this power plant that electric vehicles gained the greatest popularity and were able to reach speeds of up to 208 km / h.

And, finally, advocating not only cleanliness, but also safety, the designers tried to protect the future car owners as much as possible. The body of the electric car is made of shock-resistant steel, and the driver and his passengers are protected by as many as 8 airbags.

Excess demand creates losses

Now Elon Musk attributes all the company's problems to difficulties with the manufacture of Model 3, the sales of which started in the summer of 2017. With a plan to produce 5 thousand copies by the end of the year, at the moment the plant produces no more than 260 pieces per week. The head of the company made the culprit a battery manufacturer, which did not deliver high-quality equipment in a timely manner, and therefore Tesla engineers had to spend extra time and resources to modify the batteries themselves. Although why was it necessary to collect a pre-order of such a volume that later you simply cannot cope with it?

Against the backdrop of this delay, news of which was quickly spread through the media, the share price immediately fell by 3%. Investors in the company are also worried about such nuances as the extremely small number of official services for electric vehicles. Whereas Volkswagen from day to day should release an analogue of Tesla, which already promises to be several times cheaper and provide potential consumers with the proper infrastructure.

In addition, the company notified its employees about the layoff, which will affect from 400 to 700 people from the currently employed 33 thousand. The management thus plans to deal with the lack of efficiency of the current production and "optimize" indiscriminately both workers and engineers. All employees who are laid off will receive generous bonuses, and their places are immediately planned to be filled with more promising ones.

In parallel, Elon Musk is negotiating with Japanese corporations on the construction of a giant plant for the production of car batteries, which can fully provide the entire production volume of Tesla. However, the project is still at the planning stage, since such an idea would require too much global financial investments for the corresponding level of growth.

We must pay tribute to the founders of Tesla - they are revolutionaries in their field, determined to make the dream of many automakers a reality. Unfortunately, they themselves did not understand what problems and costs they would face. The modern world is absolutely not ready for electric transport, and therefore, before developing a car and technologies for it, one should first of all think about the issue of production, operation and disposal of batteries.

The effectiveness of Elon Musk is now raised to the rank of legend, and his effectiveness is confirmed only by the fact that, in a fabulous state, he personally approves all expenses more expensive than 10 thousand dollars. It seems that he dreams of having robots filling his factories, the most productive, able to control the process of producing an electric car from start to finish. Unfortunately, with this approach, all of his most innovative ideas will never become budgetary and profitable.

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