Tesla News: Loses New Jersey, Plans to build a Gigafactory

Tesla Motors’ master plan is to expedite the conversion of an oil-based dependent economy to a solar-based electric economy. Some of the challenges are the lack of capital and a factory capable of mass production which would drive down the cost in order to produce affordable electric vehicles. To solve the money problem, Tesla starts by selling premium electric vehicles with the manufacturer price equal to their sales price; there are no discounts or room for negotiations. Every vehicle that’s sold generates money goes back to Tesla’s R&D to pay for more vehicles so that each successor is more affordable than the previous model. Tesla Roadster is the first of its kind to bring forth a luxury sports car, followed closely by the Model S family car. Their third generation of electric car that is coming soon in 2014 is the Model X.  A blog entry from BERC covering Model S and its trip across the United States can be found here.

A Tesla store in Miami – Source: Joe Raedle/Getty Images

Unique to Tesla’s business plan is a direct-sales model. The public buys directly from the manufacturer in contrasts to the dealership system, a long establish process of how people buy cars in the United States. This new system has recently brought Tesla in the spotlight with the state of New Jersey.  The New Jersey Motor Vehicle Commission ruled in banning Tesla from direct-sales, effective April 1, 2014.  After April 1, the two stores in New Jersey would turn into galleries and the state’s residents would only be able to purchase the cars in neighboring states or online at the company’s website.

Map of United States showing Tesla’s availability in various states – Source: Forbes

Also in the news is Tesla’s expansion to build their “Gigafactory.” As alluded before in Tesla’s endeavors to bring affordable electric vehicles, the purpose of building the Gigafactory is to produce more lithium ion batteries; by 2020, Tesla hopes to produce more lithium ion batteries than global lithium ion batteries production in 2013. By mass producing its own batteries, this will drive down cost to build an affordable electric vehicle. To fund its production, Tesla is offering $1.6 billion convertible senior notes. The location of the Gigafactory is to be determined.  Tesla ruled California out as a location; the location of choice is between Arizona, Nevada, New Mexico and Texas. More about the convertible senior notes and the Gigafactory is found here and here.