Monday, November 02, 2015
Is Tesla Doomed?
Tesla's showing all the signs of a company in trouble: bleeding cash, securitized assets, and mounting inventory. It's the trifecta of doom for any automaker, and anyone paying attention probably saw this coming a mile away. Like most big puzzles, the company's woes don't have just one source. It's true that the world may be running light on buyers who will spring for a big-dollar electric vehicle that can't make the hike from Detroit to Chicago without stopping for a long charge. And cheap gasoline isn't helping Tesla's case. Right now, prices around the country are hovering close to $2 a gallon. If that's bad news for the Prius and the Volt, it's worse for the Model S. In addition, there's never been any secret sauce to the company's battery technology. The automakers that bought into Tesla's tech early did so to avoid having to pony up development dollars on first-generation battery packs of their own. Now that Audi has announced it's getting into the EV game, Tesla should be even more concerned. I think Tesla CEO Elon Musk figured that if factory stores work for Apple, they'll work for Tesla. But the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids. A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. It ties up a staggering amount of capital, especially when you factor in inventory. Under a traditional franchise arrangement, the factory never has to carry that burden. Right now, Tesla does...more