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Does Tesla Stand a Chance with Consumers?

Tesla Roadster_2.5From its dynamic 2010 IPO through mid-2013, Tesla Motors experienced a rise that has few parallels in automotive history. As a designer of all-electric vehicles, Tesla seemed poised to defy a longstanding trend towards commercial failure in electric cars. Before Tesla went public, several automakers tried and failed to spur strong demand for electric cars with limited ranges. Tesla’s rise was aided by longer ranges and a near-torrent of rapturous media coverage. As Tesla CEO, Elon Musk quickly became a global icon of corporate leadership.

 

In December 2013, Tesla’s path has mostly lost its sense of destiny and inevitable progress. According to Reuters’ D. Seetharaman, Tesla shares have lost 25 percent since October. Though many analysts believe the company is fundamentally sound and should recover, Tesla may never regain its status as a guiding light for the automotive industry.

 

Contrary to popular belief, Tesla’s Wall Street reversal was not solely caused by crashes and fires. While three of Tesla’s Model S cars did catch fire, these incidents alone cannot explain the public’s growing mistrust in Musk and company. Despite its reduced market share, Toyota is quietly proving that the public can eventually forgive grave technical problems. However, Toyota handled its safety crisis through frank, forthright communication. In contrast, Elon Musk has faltered by responding to Tesla’s Model S controversy with evasive, potentially misleading statements. Although the NHTSA once awarded the Model S with its highest safety rating, lingering safety questions remain unanswered.

 

Even if the public is successfully reassured about the safety of Tesla cars, it remains to be seen if Tesla has a real shot at winning over U.S consumers in meaningful numbers. Tesla’s U.S sales have never matched the company’s media-influenced stock performance. Since Tesla’s cheapest model retails for over $55,000, it is hard to imagine how the company can soon achieve a massive customer base. Reportedly, Tesla’s next model will feature a lower price tag of $30,000. It is debatable if that sum is low enough to overcome the public’s skepticism towards battery-operated cars. In the meantime, business analysts are divided over the question of Tesla’s future performance. While the company might face a rocky road ahead, there’s no denying that Elon Musk has surprised plenty of critics in the past. In spite of the fires, it is possibly too soon to write off this convention-defying company.

 

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