As Tesla unveils plans for a “solar-roof-with-battery product”, will Elon Musk’s company make money any time soon?
James Hind, chief executive of Carwow, says Yes.
Tesla has built a highly desirable brand, as shown by the huge number of pre-orders for the Model 3. Demand for its cars will therefore be strong – even if other manufacturers manage to rival its electric technology. The company is spending a lot on setting up supply, by building state of the art factories, which will pay-off for decades to come. Its innovate method of selling its cars – either online or direct from its own showrooms – means the buying experience is far more enjoyable than other manufacturers, which run franchised dealer models of variable quality. Consumers will become more confident in buying Teslas, and more brand loyal. As a business, Tesla is still young and choosing growth over profit. It has proven its ability to grow rapidly through creating innovative technology, hiring some of the best people in the automotive industry, and building a loyal consumer base. All this will lead to a highly profitable company.
Wendy Tan White, general partner at Entrepreneur First, says No.
I’m betting long on Elon Musk and Tesla. Tesla’s mission is broader than making money, it wants to be at the forefront of innovation. Critics say that these grand statements of wanting to build sustainable energy, autonomous car fleets are empty because of the lack of time lines and detail. And yet everything that Elon Musk has achieved with Tesla, SpaceX and PayPal demonstrate that a commitment to innovation starts to pay off in the long term. While Tesla’s Autopilot has recently been marred by controversy, what Tesla has achieved is something that other car manufacturers are striving to replicate. There is something of the mad scientist about Musk, but where he leads, others will follow. He is pioneering for the future; at some point, his products will mature and meet the needs of a majority market. At that point, if he has the right team in place, they will harvest value. But for now, profit can wait.