Tesla Motors Inc (NASDAQ:TSLA) has taken Wall Street and the electric car-buying public by storm, and there’s little reason to think that Tesla is just a flash in the pan. That said, every Wall Street success story has to deal with their share of growing pains, and Tesla Motors Inc (NASDAQ:TSLA) is certainly no exception. Barry Wood of Marketwatch penned an article Thursday outlining some possible potholes for Tesla in the not too distant future.
The Tesla story
Step one for founder Elon Musk in building Tesla Motors Inc (NASDAQ:TSLA) was establishing the brand with a top-quality luxury vehicle. After you hit the ground running with a strong brand it’s time to boost production, go international and widen product selection. Step three is to create a smaller sedan priced at about $35,000, within reach of the upper middle class.
Analysts project Tesla will manufacture at least 35,000 vehicles in 2014. To put things in perspective, that number is only equal to half the F-series pickups Ford Motor Company (NYSE:F) produces every month.
Tesla Motors Inc (NASDAQ:TSLA) and Musk are certainly not resting on their laurels. A new gull-wing luxury crossover is expected by late 2014, and the affordable Generation Three family car is slated for 2017. The company plans to eventually manufacture 500,000 cars per year.
There is still significant room for expansion at the company’s Fremont, California manufacturing plant. Tesla Motors Inc (NASDAQ:TSLA)’s current workforce of 2,000 is non-union, but enjoy above-average pay and benefits. Musk has stated publicly that he is neutral on the idea of plant workers becoming unionized.
Tesla to produce battery cells?
A shortage of the lithium-ion battery cells that power Tesla Motors Inc (NASDAQ:TSLA)’s vehicles is a major stumbling block confronting Musk and TSLA. Japan’s Panasonic Corporation (TYO:6752) is currently the company’s sole supplier of the battery cells, and is reportedly unable to keep up with the expected increased demand from Tesla Motors Inc (NASDAQ:TSLA).
The looming battery cell shortage has led Musk to contemplate building a battery manufacturing facility himself. “This will be a giant facility,” Musk elaborated in an interview November. “We are talking about something that is comparable to all of the lithium-ion battery production in the world — in one factory,” He went on to say the facility could be built in a partnership with the Musk-controlled SolarCity, the largest supplier of residential solar panels in the U.S.