There’s never been a car company like Tesla Motors, the first viable challenge to the big automakers in recent memory. Elon Musk is a rock star, #1 on the Fortune “2013 Top People in Business” list as “investors and consumers wholeheartedly embraced his ideas and vision.” His every pronouncement is news, even if it's about trains. Tesla stock is soaring, at 170 a share on Monday. And the company sold 6,900 cars in the fourth quarter of 2013, which was 20 percent over what the company had said before.
Sure, Tesla is only making money if you disregard Generally Accepted Accounting Principles (GAAP), but it’s on a trajectory that looks good from many angles, including the first appearance of the Model X (on the S platform) this year and, in three years, the mass-market $40,000 Tesla everyone’s waiting for. Tesla won’t reach its hugely ambitious 500,000-car-per-year target with $100,000 Model S sales; it needs cheaper cars, and that’s what the so-called Model E could be.
At the Detroit auto show, Tesla’s press conference was mobbed, despite a) Elon Musk was elsewhere; b) The stand (above) was boring; and c) There was no production model of the Model X to unveil. With a Model S as backdrop, spokeswoman Liz Jarvis-Shean told me, “We’re continuing to talk about the Model S as an incredible car, expanding our service centers and the Supercharger network.” The latter is now around 80 worldwide, and in the U.S. a cross-country network is almost in place.
Tesla has had “phenomenal growth in Europe,” Jarvis-Shean said, and in December it was once again the bestselling car in Norway. Get this: 553 Teslas sold, and only 179 Ford Focuses. That gets Detroit’s attention.
OK, enough adulation. Tesla is doing great, but it faces some challenges. Its go-it-alone sales network remains under attack from state-based auto dealers. It could run out of customers able to afford the Model S. There could be further delays getting the already late Model X (below) out. The company's culture may be too insular for its own good.
At its press conference, which was led by Jerome Guillen, vice president of worldwide sales and service, the company brushed aside an official federal recall of its garage chargers, pointing out that “99 percent” of them had already been updated with an over-the-air software update. Referring to the National Highway Traffic Safety Adminstration, Guillen said, “NHTSA may call it a recall, we call it modern technology.” In a tweet, Musk said that “the word ‘recall’ should be recalled.”
But, of course, Tesla really needs to stay on the right side of NHTSA, because the agency’s review of its three Model S fires is still ongoing. Part of what make’s Musk Musk, however, is refusing to kow-tow to authority (any authority) or colleagues he might need down the road. He can be very caustic about the company’s rivals. Remember Steve Jobs heaping curses on Bill Gates?
It’s hard to know when this incredibly aggressive strategy could cause Tesla problems. Incoming Acting NHTSA Director David Friedman, whose background is at the Union of Concerned Scientists, is generally favorable to electric cars, but he’s certainly going to investigate the company when the facts merit it. Tesla also has multiple important dealings with other automakers, including two, Daimler and Toyota, that own pieces of the company. Others create a lucrative revenue stream for Tesla by buying its surplus California electric car credits.
In Detroit, Guillen said that sales and service in 2014 will be characterized by “reckless growth,” with Musk later correcting that to “relentless” growth. “Jerome is French so sometimes his choice of words does not translate correctly,” Musk said.
But isn’t “relentless” kinda charged, too? Even Tesla has to pause sometimes and smell the coffee. For MNN's entrepreneurs, here's Musk on three things you need to do to have a successful company. Find something that other people will want, he says and then "work 80-hour weeks, every week."
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