A corporate strategy article by Thunderbird students Alistair Booth, Stephen Kill, Adeola Shabiyi and Douglas Stetzer
Tesla caught the eye of the consumer when they released their Roadster in 2008. The Roadster, a true fully electric super car with a practical driving range, boasts a 0 to 60 mph acceleration time of less than 4 seconds and can go almost 250 miles on a single charge.[i] Tesla, however, has not been able to turn its buzz or technology into exciting growth. In 2010 Tesla reported annual revenues of $116.7 million, only a 4% increase from 2009 and a net loss of $154.3 million in 2010, almost three times the net loss of 2009.[ii] To maintain operations and development of new products and technologies, Tesla has been able to garner modest investment through venture capital, US government loans, a successful IPO, and investment from competitors and suppliers.
Tesla and its investors are eagerly awaiting the launch of its new luxury Model S in 2012. Tesla has already pre-sold more than 3,000 Model S cars and plans to ramp production up to 20,000 cars a year.[iii] At an average sale price over $50,000, the Model S represents a potential $1bn a year or more of revenue for the company. Investors however, have pegged Tesla’s market cap at $2.3bn and still have doubts about Tesla and the potential success of the Model S.