Telsa Motors is on a roll. The company will produce about 21,000 vehicles this year, with over 12,000 Model S luxury sedans delivered already in 2013. Tesla’s Model S receives excellent car performance reviews and seems to have solved the range and time-to-charge issues of electric vehicles with their advanced lithium ion batteries and growing network of supercharging stations.
In National Highway Traffic Safety Administration crash tests, Model S received a five-star rating in each of three categories and overall. Tesla’s direct-to-consumer sales model is working, even in states like Massachusetts, where it’s been attacked by car dealers. And Tesla has focused on technology, with over 500 applied for patents, many for battery-related engineering. Tesla already licenses technology and sells components to other car companies, such as Toyota.
With new models on the way and with the recent good news,Tesla Motors stock (TSLA)—reached $20 Billion in market value this week, on par with many established car companies.
Tesla’s Model S may be the most digitally advanced car ever produced. Model S can be controlled by a smart phone for example, to turn on air conditioning or unlock the car or schedule charging of batteries. These features sound wonderful….if the software is bug free, if there is no interference from other phones (the reason cell phones are turned off for airplane takeoff and landing), and if the system is secure. George Reese, the director of cloud management for Dell (NASDAQ: DELL ) recently wrote in an article that the Model S has a security flaw that leaves it exposed to hackers.
Privacy could also be an issue. Tesla employs comprehensive data gathering on its cars to aid diagnosis of problems, to deliver car system software improvements, and to proactively recommend service, all potentially great features. But if insurance companies and governments have access to the same data, you might be in for an insurance premium surprise, or worse.
Tesla’s business model also puts them at risk for breakdowns and security breaches of today’s electrical grid. Any power outage of more than a few hours would strand travelers and commuters who depend on their Tesla.
Tesla has opened an exciting chapter in the automotive industry. We’ll see how the digital technology challenges unique to Tesla play out.