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Tesla Supercharged the Auto Market - But What's Next?

What’s Next for Tesla?

With an eye toward vastly increasing the number of cars it produces, car company Tesla is moving ahead with plans to expand its line of vehicles, lower the price of its cars and also manufacture new batteries.

Tesla founder and CEO Elon Musk confirmed this summer that the new car – the Model III – should be available for purchase in 2017. The news came first in an interview with Auto Express and was later confirmed by Tesla via Twitter.

The Model III will be the fourth model produced for sale by Tesla. The first, the Tesla Roadster, was produced from 2008 and 2012. It was the first car to use a lithium-ion battery and also the first all-electric car to have a range of more than 200 miles per charge.

The Tesla S and X Models

What's Next for Tesla MotorsThe Tesla S, which debuted in the summer of 2012, pushed the Tesla brand to bigger popularity. The all-electric luxury sedan – with a price starting around $70,000 for the base model – has increased sales each year since its introduction. On its website, Tesla projects that even with higher electricity bills, a 60khw Tesla saves owners about $261 per month over the cost of a gas-powered luxury sedan. To facilitate long-distance driving, Tesla has opened about 65 Tesla Stations in major metropolitan areas around the country, where batteries can be charged or swapped out. There are about 20 such stations in Europe, where sales of the car have only trailed the number sold in California.

Among other accolades, the car received the highest rating ever granted by Consumer Reports. Motor Trends also named the Model S as car of the year in 2013.

The Tesla Model X, which will be available for purchase in 2015, is the Tesla version of a crossover SUV “with the benefits of a minivan.” The Model X also features “Falcon Wings” – doors that open by swinging upward rather than out.

Both are built at the Tesla plant in Fremont, Calif.

The Model III

British engineer Chris Porritt, a former car designer for Aston Martin, is working on the Model III, which is expected to have a completely different platform than the Model S or Model X.

With the announcement of the Model III, Tesla now is set to become a competitor with brands such as BMW and Mercedes in the mid-size executive luxury car line. The cost of the Model III, about $35,000, will make it a director competitor of, for example, the BMW 3-Series.

Forbes projects that the car will outsell the Model S because of the pricing, but may also do more than that. The car, if successfully produced, will be “a major breakthrough in both the automotive and technology industries.” Offering luxury, affordability and a “green power train” will set a new industry standard, Forbes predicted.

Musk himself confidently predicts that his company will produce 500,000 cars annually by 2020. Part of that has to do with a new production facility for batteries.

The Gigafactory

Batteries for Tesla cars are currently made by Panasonic. But Tesla will begin making its own batteries – in partnership with Panasonic – with a planned, gigantic gigafactory. On the Tesla website, the expected year for production starting is 2017.

Musk announced in August 2014 that he expects whatever state wins the right to be the location of the new Tesla gigafactory will need to put up about $500 million – or about 10% of the factory’s cost.

The 10 million square foot facility will produce about 6,500 jobs, according to Tesla. The size is about five times the size of usual car assembly plants. The number of jobs is also more than double those created by most automobile production plants.

The finalists, according to the Tesla site, are Nevada, Arizona, New Mexico and Texas.

Also, Tesla’s stated goal is to double sales figures in 2014 over those in 2013 – from 22,477 cars sold to 40,000 cars sold. The company also plans to reduce the price of a Tesla over the next three years. And the number of vehicles produced is expected to increase from about 35,000 in 2014 to 100,000 in 2015.

All of this has made Tesla, which is publicly traded, a very attractive stock for investors.

Still, there are also some possible roadblocks.

Potential Problems for Tesla

Tesla does face headwinds in some areas. For example, New Jersey recently joined Texas, Arizona, Maryland and Virginia in banning Tesla from selling to consumers directly from the Tesla showroom – or even allowing them to test drive.

The ban came as a result of pressure from automobile dealers. Other car manufacturers do not sell directly to consumers, instead working through third party dealers. Dealers claimed they faced unfair competition from Tesla. In these states, Tesla buyers can look at cars in the Tesla showroom, but cannot be given information on pricing or allowed to take a test drive. They must make purchases online.

Some investors also are worried about the amount of money Tesla is having to invest to ramp up production.

And perhaps most famously, there were a series of fires that took place after Model S owners ran over metal road debris that raked the car’s underside, hitting the lithium-ion battery. However, the federal government closed its investigation in early 2014, saying Tesla’s new titanium under plating and aluminum shields meant to deflect debris from the battery will provide better protection, as will Tesla’s decision to increase the car’s ground clearance.

Image Credit: Flickr User jurvetson

This article was provided on behalf of Fun Crew USA, a Central Florida Party Rental company that specializes in water slide rentals.

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