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Tesla Model X Only Part Of Company’s Long Term Strategy

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Tesla Motors Inc (NASDAQ:TSLA) has been an unlikely success story over the last couple of years. It really isn’t that long ago that the car manufacturer was being short sold right, left and center by city traders. Since then, though, a series of shrewd business decisions has seen the company go from strength to strength. And though the murmurings from the trading community about the company being overvalued have begun again, Tesla clearly has big plans for the future.

Before discussing its latest news, it’s worth emphasizing what a huge success story the rise of Tesla Motors Inc (NASDAQ:TSLA) has been. For the firm to have established itself as a serious rival to the vastly powerful triad of General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F) and Chrysler, the so-called Detroit Three, is a massive achievement. However, in the enormously competitive motor trade standing still isn’t an option, so Tesla has already been plotting for the coming years.

The forthcoming Tesla Model X

Among these plans is the forthcoming all-electric Model X, which was discussed by the company at the Detroit Auto Show on Monday. This highly anticipated vehicle will hit the market in 2015, and the early impressions of it were extremely positive. The Tesla Model X placed on show was snowy white in color, which was appropriate given the fact that it came complete with a set of skis and a snowboard fitted to the top.

It is perhaps hard to understand for the uninitiated, but the vehicle is by no means ready to go into production despite this apparent prototype having already been unveiled. The vice president of Tesla Motors Inc (NASDAQ:TSLA), Jerome Guillen, spoke about the Model X at the Detroit show and indicated that employees at every level of the company are currently working “vigorously” in order to ensure that the vehicle can be launched into the marketplace in the mid-term future.

Tesla Model X Only Part Of Company's Long Term Strategy

But he was reluctant to put a date for release on the Tesla Model X, despite the media’s insistence that sometime next year should see it available for purchase. All Guillen would say when pushed was that “it’ll be here at some point”.

Aside from that, the vehicle remains something of an enigma. We know that this forthcoming electric SUV will be slightly dearer than the highly popular Model S, and that it will come with all-wheel drive as standard. But Tesla Motors Inc (NASDAQ:TSLA) has kept extremely tight-lipped about the vehicle aside from this, leaving industry analysts to speculate as to what their motivation for this concealment is.

Tesla Model S still shifting units

One possible explanation is that the aforementioned Model S is still performing extremely well in Europe and the United States, and Tesla simply don’t feel there is any requirement to rush a new vehicle out to market until it is truly ready. This would seem to be a highly sensible strategy given that a lot of Tesla Motors Inc (NASDAQ:TSLA)’s success over the last eighteen months can be attributed to the quality of its vehicles and the enthusiastic critical reception that they have been afforded. The Model S is capable of running 300 miles from a single charge, and is generally regarded as the pinnacle of electric cars at this point in time.

This assumption would also fit in with the pronouncements of Guillen at the Detroit Motor Show, as he was keen during the press conference he gave to push the achievements and quality of the existing Model S. Guillen claimed that the Tesla Model S is one of the safest vehicles on the road, and even stated that there have been no major injuries associated with the vehicle thus far. He also opined that the car is one of the most desired vehicles in Norway due to its ability to thrive in challenging winter conditions.

Tesla Motors Inc (NASDAQ:TSLA) believes that it will sell around 40,000 Model S units during 2014, and it may be that in the highly competitive industry that they’re in the company are simply biding their time for the correct juncture to reveal details about the Model X, and indeed release it. The profit margins in the car manufacturing industry are always tight, and it seems possible that Tesla is simply waiting for the technology associated with the Model X to become more viable for them.

Tesla’s future Chinese plans

Unquestionably, Tesla Motors Inc (NASDAQ:TSLA) will be well aware that the niche market in which they’ve made their name is set to get considerably more competitive over the next few years. Audi are already signalling their intention to release a pure electric car in the shape of the Q8 e-tron quattro, while other big players such as General Motors are also moving into the strata as well.

Tesla Motors Inc (NASDAQ:TSLA)’s long-term strategy may involve a diversification and attempt to penetrate new markets. Already the company has announced that it is preparing for a roll-out of free charging stations in China. This is being done with a view to gaining a head start in selling their electric cars in a nation which is notoriously riddled by pollution.

Although we all like to hear salacious and juicy details of sexy products, Tesla Motors Inc (NASDAQ:TSLA) seems instead to be developing a much more sustainable strategy which will cement its future for years to come.

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Christopher Morris

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