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Three Biggest Challenges That Tesla is Now Facing

Tesla sits at the juncture between a tech startup, untethered from the rules of the old economy, and a manufacturer that needs to produce physical goods.

Elon Musk is one of the most banked upon name in the disruptors industry. He is famous for his futuristic gambles, but Silicon Valley’s latest rush to embrace artificial intelligence scares him. And he thinks you should be frightened too. Inside his efforts to influence the rapidly advancing field and its proponents, and to save humanity from machine-learning overlords.

Elon has been fascinated by electric cars for two decades. After earning bachelor's degrees in physics and business from the University of Pennsylvania, he worked briefly on ultracapacitors at Pinnacle Research in Silicon Valley to understand their potential as an energy storage mechanism for EVs. He planned to do graduate studies at Stanford in materials science and applied physics but put school on hold to start Internet companies Zip2 and PayPal. In addition to his Tesla duties, he serves as CEO and CTO of SpaceX, and he's Chairman of SolarCity. Also at present Musk is engaged as Founder of The Boring Company and Neuralink as the Founder.

Elon at Tesla Motor is involved in creating a revolutionary product, that strives to accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars, transforming the way people drive and move. 

Tesla has gone public as of June 29, 201 with market cap of $34.32 billion. Motors’ goal is to increase the number and variety of EVs through three strategies. The first is to sell its own branded vehicle through its showrooms. Second is to sell premium, high-quality, patented electric components to other automakers. Lastly, it serves as a “catalyst and positive example to other automakers.

There has already been a movement in the EV market with the push of the GM Volt, rumored to have been inspired by the Tesla Roadster. The development of the Model S, the all-electric family sedan that is produced at the Tesla Factory in Northern California is said to be one of the best prototypes created.

It has been a decade over 2007, since Elon Musk took over the company as the CEO, and Tesla's regional sales and service centers across two continents in May 2009 secured a $50 million investment and strategic partnership from Germany's Daimler. He spearheaded a successful cost-down program that enabled Tesla to achieve profitability in July 2009. 

Though it is a very futuristic company, there are immense opportunities before it in Asian countries like India and China but the flip side of the coin also represents upteen number of challenges. 

Challenge #1: The Asian Market for Tesla Threatened

Strong local manufacturing in China competing with Tesla represents a major challenge for it. Asian governments getting serious about EVs with a spate of recent measures, ever since Tesla has announced it is opening up marketing efforts in more Asian countries. Various other players have recently announced new plans to manufacture in China especially BYD Co. Playing in the Chinese ground is tougher than meeting regulations for manufacturing in North America or Europe.

Some observers scoffed at Elon Musk's recent plans to integrate EVs, solar energy and battery storage. In fact, this is already happening in China. This means Tesla is facing fierce competition in Asia, a market in which it has to succeed in order to become profitably viable. China is the world's largest auto market, Japan the third largest and India the sixth largest.

Elon Musk seems to have realized this imperative, with recent announcements to enter new markets in Asia. Earlier this year, he said Asia was the "biggest area of expansion" for the company. It remains to be seen whether Tesla has the capital and the management expertise to catch the wind in Asia.

Challenge #2: The Competition from Other Automakers

The established auto manufacturers all over the world, have all jumped onto the EV bandwagon, some with more enthusiasm than others. It looks though as if many of the established players, such as Mercedes  and Audi, are proceeding with a great deal of caution. They are mostly not going to have competitive vehicles on the road in the short term. IT companies such as Apple and Alphabet are going down the strictly autonomous vehicle line, again with very uncertain timing. Not to mention Uber and its may failed attempts in testing EVs and driverless cars.

Recently analysts have raised concerns over the expanding demand-supply gap. Tesla is having some problems keeping up with orders and staying on schedule with the delivery of their next vehicle. At $71,000 the Model S is much too expensive to be sold to most consumers worldwide. Tesla will have to rely on its Model 3 mid size sedan to attract the buyers that will give the company stability. 

Challenges #3: Workers, Wages, Unions & Losing Out Money

When Tesla bought a decommissioned car factory in Fremont, California, Elon Musk transformed the old-fashioned, unionized plant into a much-vaunted “factory of the future”, where giant robots named after X-Men shape and fold sheets of metal inside a gleaming white mecca of advanced manufacturing.

Nobody doubts the appetite for Musk’s electric cars, and his promise to disrupt the carbon-reliant automobile industry, has helped Tesla’s value exceed that of both Ford and, briefly, General Motors (GM). But some of the human workers who share the factory with their robotic counterparts complain of grueling pressure – which they attribute to Musk’s aggressive production goals – and sometimes life-changing injuries.

Ambulances have been called more than 100 times since 2014 for workers experiencing fainting spells, dizziness, seizures, abnormal breathing and chest pains, have been reported. With a range of issues from South Australia’s electricity (only renewable sources available); to Germany’s union battles, Tesla is fighting it all and more.

It sits at the juncture between a tech startup, untethered from the rules of the old economy, and a manufacturer that needs to produce physical goods. Nowhere is that contradiction more apparent than at the Tesla factory, where Musk’s bombastic projection that his company will make 500,000 cars in 2018 (a 495% increase from 2016) relies as much on the sweat and muscle of thousands of human workers as it does on futuristic robots.


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