designs, develops, manufactures, and sells fully electric vehicles, advanced electric vehicle powertrain components, and energy storage systems. Tesla has created in-house capabilities that design, engineer, and manufacture their electric vehicles. Tesla aims to offer high-performance, electrically powered vehicles to transition the world from gasoline to electric mobility. The electric vehicles they currently offer are the Model S and Model X which have attractive designs and performances similar to a Porsche. Tesla is the only automaker that sells zero-emission vehicles in mass production.
Strategic Problem.
Tesla's main strategic problems stems from its limited production capabilities. Tesla offers superior electric vehicles that have an incredible demand in the United States and internationally. However, Tesla's in-house production facilities cannot expand fast enough to keep up with the demand. Tesla has announced that it would not meet its forecast for vehicle sales this year and has lowered their targeted number. A reason for the delays in production is that Tesla strives to only deliver high quality vehicles instead of producing a greater amount. With manufacturing being a choke point for Tesla, this has limited their potential revenue and market reach with delays in the deliveries of customer's cars reaching up to two years. This has also given competitors the opportunity to catch up in terms of technology in the electric vehicle market.
There are many factors that contribute to Tesla's production capabilities. Some factors include limited capital expenditure, limited supply of lithium-ion battery cells, supplier bottlenecks, high research and development costs, and the company's low expertise of mass production. Tesla is a fairly new car manufacturer with little expertise in mass producing cars compared to established automotive companies such as Toyota, Volkswagen, and GM. Tesla does not currently have the capital to set up another production facility.
