For those not paying attention, Tesla has continued to post massive quarterly revenue despite its global Model 3 production woes and the increasing difficulties in scaling manufacturing. Last week alone, the electric automaker announced third-quarter production rose to 6,000 Model 3s, almost three times as many as in Q2. Then it announced a plan to spend $2.8bn to buy electric vehicle technology and acquire SolarCity, a solar energy company. With that much cash in the bank, Tesla has the ability to increase production and hit production goals, much like it is doing with the Model 3. It doesn’t mean Tesla’s competitors have no chance.
Apple invited the press to Cupertino for a special event that looks to be in the realm of hardware and, interestingly, software, but it is also the biggest event of the year for the automotive industry. The company set the bar high last year when it debuted the long-awaited electric vehicle, but Apple’s plans for a car are still shrouded in mystery. With Apple’s leverage over its car partners, suppliers, and production facilities, its mass-market vehicle seems inevitable.
The next week will undoubtedly be an eventful one for carmakers as they grapple with Apple’s rise. But it is a bittersweet truth for the industry that even though Tesla and Apple might be putting some of Europe’s largest automakers out of business, the auto market is not about to disappear anytime soon.
Tesla’s high production of the Model 3, which has always put it in a different category than some of its competitors, was simply a product of a planned launch and not some radical innovation that has made Tesla the world’s most sought-after carmaker. Overwhelming demand among consumers for its luxury offerings like the Model S and Model X meant Tesla had ample resources to rapidly increase production.
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Because Tesla is now focusing on integrating the factory and manufacturing of electric vehicles, “the timing is just right for Tesla to take control of its product and deploy all the functions of a mass-market vehicle”, David Menlow, president of the research firm IPAliby, told Reuters.
Take a step back and compare the American tech titan’s fortunes with the brands that are piling up billions in losses. Tesla is challenging the idea that consumers should pay top dollar for a luxury car, and that the alternative is to buy an SUV and fill up the gas tank regularly. It is even planning on decreasing the range of its vehicles due to concerns over battery lives. GM is trying to be more global with its all-electric Buick Marauder and on the whole, Europe’s automakers are in serious trouble as Chinese automaker is making better cars.
To remain relevant, automakers will need to adopt a more flexible approach to their manufacturing to keep pace with new technologies. They will need to understand their customers’ needs and evolve, just like Tesla. Frankly, in a few years, Americans will be sticking with their Tesla’s much like they will eventually buy into self-driving cars.