David Zalubovsky / AP
Tesla finally makes a profit. For the first time, a Californian electric car manufacturer posted two quarterly earnings in a row.
These profits were due to expensive cars – more expensive versions of the new Model 3 Tesla, which are sold for $ 50,000 or more.
But instead of doubling the strategy, which turned out to be profitable, Tesla dismisses thousands of people to cut costs, reduce production of Model S and Model X and build a new plant in Shanghai. This is all part of an aggressive push to make mass-market cars that sell for $ 35,000.
This is because Tesla CEO Elon Musk does not want to sell expensive cars to the world elite. He never did.
Musk called it his "Secret Master Plan." The “secret” part was a joke – he talked about it all the time. But the “master plan” was very serious.
Step One: Make a high-performance, extremely expensive electric sports car for which people will want to spend $ 100,000: a Roadster.
Step Two: Use this money to make a car cheaper, and use that money to make even cheaper one. In the end, Musk said, the company will start mass-producing a truly affordable electric car.
The main goal was nothing but save the world. Some wealthy people driving electric vehicles wouldn't shoot at climate change, but electric vehicles for each – it could do that.
Musk was surprisingly consistent in this vision. In 2006, he wrote that "the main goal of the company … is to help accelerate the transition from the extraction of hydrocarbons to a solar electric economy."
At the end of 2018, he told 60 minutes: “The whole point of Tesla is to accelerate the emergence of electric vehicles and sustainable transport and try to help the environment. We believe that this is the most serious problem facing humanity. ”
Mass-market cars such as the Tesla Model 3 were the key to this vision. But the increase in production is notoriously difficult. The last year and a half has been painful for Tesla, as the company has coped with production and supply problems.
tesla It has massively increased production of the model 3: the company sold almost 140,000 models 3 last year. But despite the increase, Tesla still could not offer a car at its advertised price of $ 35,000.
It is still trying, despite the problems: “The road ahead is very difficult,” Musk told staff on 18 January.
In the meantime, Tesla is already successfully competing with traditional luxury brands.
Brian Moody, executive editor of Autotrader, says Tesla has to abandon the master plan and just admit that it’s a premium car manufacturer.
“We can just be honest and call them luxury cars,” he says. “And I don't think something is wrong with that. … They created something great that people love. Well, congratulations. You should enjoy your success and keep doing more. ”
it Moody says that only Tesla's “philosophy” pushes the company in a different direction.
However, Musk’s master plan does not conflict with business interests.
“After all, Tesla is a for-profit company, not a non-profit,” says Jessica Caldwell, executive director of industry analysis at Edmunds. "It will make money."
“Elon Musk and Tesla, who have such a grandiose vision of humanity and civilization, certainly differ from how other car companies manage their working day,” she says. But creating a car for the masses also opens up new markets that can help as a result.
“Tesla against the wall,” she says. "It seems that they are under some kind of real pressure from business."
The company has already held several voluntary deadlines for model 3. Meanwhile, traditional automakers are investing serious money in bringing new electric vehicles to the market. This, of course, has always been part of the Musk plan – but it also means new competitive pressure.
Investors and analysts are waiting for Tesla to make a long-planned transition to large and inexpensive cars.
And potential buyers are also waiting.
Marc Vidaurri of San Antonio, Texas, tested the model 3 weeks ago. He loved it – but was let down by the price tag. At a price above $ 35,000, he is beyond his reach.
“I believe that advances in technology should not be a luxury,” he says. "It must be something that is discovered and … able to spread among every class of citizens."
He still dreams of model 3 on his way. Someday – when it becomes more accessible.