Tesla's Big Gamble
For years Tesla’s value has been skipping up and down like a heart monitor, volatility that is a result of emerging technology finding its footing in a crowded automobile market. Tesla’s new Gigafactory in China has the fire power to launch them from a luxury brand to a mass produced brand but also the combustibility to send them plummeting. Tesla has put itself in a great position in the American market; consuming a portion of luxury brand sales from Mercedes Benz, BMW, and Audi’s customer base. Depleting the bottom line from their luxury sales profits and forcing their budgets to expand into the electric market much faster than any of them would have likely wanted. Tesla’s commitment to the Chinese market, seems smart for the immediate future of the company trying to expand its reach. As Beijing weighs on slapping US automakers with a 50% import tax, Tesla would be mostly shielded from this with their new Gigafactory plans in China. You may also note that Tesla has a Gigafactory in Nevada where it produces the Model 3 electric motors and battery packs, in addition to Tesla’s energy storage products, Powerwall and Powerpack.China, having one of the largest automotive markets in the world, seems like an ideal location for Tesla to branch out and thrive. However, auto sales in China fell yet again for the 15th month out of the last 16 months. Many analysts have predicted this slide in the Chinese auto-market and we seemingly now are witnessing this decline as they struggle to offload inventory. Will Tesla’s China bet be the catalyst that finally crack pry’s strong market share numbers from other American giants GM, Ford, and Fiat Chrysler or will this gamble have been to big to bounce back from?Only time will tell as the EV wars push the envelope of vehicle manufacturing into realms that has automakers, salespersons and the individuals that service them…. At the edge of their seats.