When one thinks of Tesla (TSLA), he likely envisions luxury electronic cars. Tesla's early Roadster concept and Model S are extremely popular, highly demanded, and super expensive machines (the Model S is the only car with a resale value above its initial purchase price). Thus, it's no secret that Tesla caters to a wealthy clientele. However, Tesla’s CEO, Elon Musk, recently announced a shift in marketing tactics. Musk plans to expand his company out of its high-priced, niche market and compete against cheaper brands like Ford (F), GM, and Toyota (TM).
By 2017, Tesla plans to release its Gen III (or Model E), a car designed for the everyday consumer. The Gen III will, reportedly, be priced between $30,000-$40,000. Although Tesla will most likely witness lower margins, Musk’s plan to design a more basic version of Tesla's luxury Model S is specifically geared towards capturing market share; he wants his company to compete with lower-end car manufacturers and lure customers away from more basic electric cars. Tesla’s biggest challenge comes from the Nissan Leaf, a fully electric car that sells for around $29,000, and has a range of about 84 miles (this price point largely undercuts Tesla's margins).
Tesla has partnered with Panasonic to help with battery development, and hopefully bump up the Tesla Gen III's release date. This new partnership will yield increased battery research, and allow for high quality lithium-ion cell development. Panasonic Executive Vice President Yoshihiko Yamada said that “once [they] are able to manufacture lithium-ion battery cells at the Gigafactory, [Tesla] will be able to accelerate the expansion of the electrical vehicle market."
Tesla’s recent success and leadership in the automobile market is largely due to its satisfactory customer service and landmark innovations. Tesla's customers are so focused on craftsmanship that a Long Island couple recently purchased a full-page ad in the Palo Alto Weekly to propose changes to Tesla's current Model S. More surprisingly, Musk then replied via Twitter (TWTR), claiming that many of their suggestions “will be implemented soon."
Although Tesla’s stock soars to new highs every month, the company still has tremendous growth potential. Tesla will likely close the month of August with gains of nearly 18%. And as it scales to meet demands, Tesla will undoubtedly experience more publicity, increased sales, and a higher share price.