Tesla is piling up serious problems that threaten its future

As the saying goes, Elon Musk has a mountain of problems piling up on his desk. On top of record losses of 784 million dollars in the first quarter of 2018 (almost double the figure for the same period in 2017) and the much-publicised production halt last April, Tesla now faces new problems: on one hand, the lawsuit filed by truck maker Nikola, accusing it of plagiarism in the design and development of its electric truck.

Nikola is asking Tesla (this is not a pun: in the race to lead electric mobility, both companies chose the name of the famous scientist to identify themselves) 2 billion dollars (nearly 1.67 billion euros), arguing that Elon Musk’s company infringed the rules on the use of certain Nikola patents concerning the aerodynamic development of their respective electric trucks. Apparently, the designs of the windscreen, the doors and the overall aerodynamic silhouette of Tesla’s truck are the same as those patented by Nikola for its electric truck.

In a truck, aerodynamics is just as important, if not more so, than the electric motors or batteries used, since true efficiency on the road depends on it. For Tesla, Nikola’s claim has no basis, so the two companies will have to settle their differences in court. Nikola and Tesla are competing to be the first to bring their electric truck to market. Nikola plans to start production of its own in 2020, while Musk’s company should launch it in 2019, unless it once again fails to meet its own schedules.

This is precisely what is really complicating life for the ingenious American entrepreneur. To meet his commitments on Model 3 deliveries, Musk has even been forced to sleep at the factory where Tesla builds its compact vehicle. Last April Tesla once again failed to meet its production and customer delivery forecasts for the Tesla Model 3, a model that brings the brand revenue of 3.408 billion dollars and has many committed deliveries to customers who have already paid in advance or handed over a significant deposit on their car.

Musk triumphantly announced that the factory had set a new production record, 40% higher than in the last quarter of 2017, although clearly below the targets that Tesla itself had set for this period. “Our understanding of production is improving exponentially,” Musk said. “We are—he said—evaluating ways to achieve higher production volumes with lower costs and capital expenditure, simplifying the production chain and getting employees involved in improving how the parts are made and delivered.”

After the presentation of last quarter’s results, the company’s share price fell by 5 per cent, although it later recovered, but the constant business ups and downs are starting to wear investors down, who are also even more wary of the strong interest shown by traditional European and American manufacturers in developing electric vehicles, and of the recent accidents involving the brand’s vehicles fitted with autonomous driving technology, one of the strong selling points of Tesla models in the United States.

The growing interest that European manufacturers show in producing electric vehicles is worrying not only because of the enormous strength of the new rivals Tesla will face in the market, but also because of the broad experience and know-how European manufacturers have in both production quality and cost reduction, something Tesla has consistently struggled with.

Virtually all European manufacturers are now convinced that the future of the automotive industry lies in electrifying their models, and have fully committed to reorienting their production and sales policies towards producing hybrid, electric and plug-in models. Besides posing a tremendous challenge for the industry as a whole, this will bring a strong presence of cutting-edge new models onto the market, which Tesla will have to face while being less well prepared than all its rivals to cut its costs even further.