What Happens When Tesla Motors Can’t Meet Their Demand?

What Happens When Tesla Motors Can’t Meet Their Demand?

/ April 17, 2016 / 726 Views

This is a seldom asked question. A question that, in true fairness, nobody wishes to ask these days. Tesla Motors recently recorded over 400,000 pre-orders for their Tesla Model 3 – a feat seldom seen in the business world – giving naysayers a literal shut the hell up in any language spoken on this planet. On the other hand, the company seems to be coming to a point where they have to ask themselves some worrying questions, questions that not only will Tesla have to answer – but every other car manufacturer out there.

For some, the numbers for the Model 3 represent all the Tesla wannabe early adopters who couldn’t swing the $100,000 purchase price of a Model S or Model X. On the other hand, Elon Musk, Tesla’s CEO, always vocally supported the fact of the company not having demand issues. The company has production issues. This could very well mean that the company – who in most normal of production circumstances (currently) has issues in producing more than 500,000 vehicles per year – will have to face a strong plummet in demand in the forthcoming years if they cannot meet current demand numbers. Mind you, Tesla Motors’ target production rate is 500,000 – by year 2020. that is, a highly demanding production goal to be made.

Yes, Tesla is creating that monster of a factory. Yes, they have plenty of liquid assets – cash for those not financially set – which means they will somehow satisfy the demand with actual production numbers. But it could very well mean that they have to face some hard choices, negating their plan to rule the electric car world in the forthcoming years. But, why is that so? Isn’t high demand good for a car company – you ask yourself. Yes, it is … kinda.

We have seen Apple – who plenty of pundits compare Tesla to these days – go to their direct competitors, all in order to be able to meet high demand for the iPhone. Will Tesla Motors result to the same thing? Will the company move production to Chrysler, Ford or General Motors? While I firmly believe Musk is a great individual who’s sole purpose is to enhance the world we live in, there will be plenty on their board of executives fearing such a decision. But it could very well be a blessing in disguise for the American car industry, the workers in said business area, but also, for the environment as well.

Utterly impressive demand is a good problem to have. How will Elon Musk and his minions handle it. That’s a wholly different question.

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