Based in Silicon Valley, Tesla has, for the entire history of its existence, been known as a tech-based company. In this sense, do not take “tech” as meaning that of “technology.” Most all of the current automakers have been knee-deep in technology and have been for over pretty much a century now. Gone are the days of the perception that the automakers are sitting around Detroit, pounding out the newest makes and models with a hammer.
For years, Wall Street has been doing its best to shove the round peg that is Tesla, into the square hole of the stereotyping of a software firm. Although the comparison has been nothing more than a banging of heads, until now, it seems there is a small bit of fact to the matter.
On Wednesday, Tesla reported its worst first-quarter earnings—with an estimated loss of $700 million, in addition to a significantly reduced return on revenue of $4.5 million. The experts and analysts have stated the loss is very easy to explain—distribution. Tesla built an estimated 63,000 of its Model 3 vehicle in just the first quarter alone.
With the company operating only one assembly plant, based on the West Coast, the struggle is real when it comes to getting the product to the people—with the most significant effort being the foreign market.
This loss if fixable, however, it will take a while to overcome. Admittedly, trying to work within the real world can equal a very daunting challenge, not only for Tesla but for any business today. However, when factoring in the struggles associated with distribution as well, one can see how the significant amount of losses could have occurred.
Tesla will have to take a long hard look at their distribution model, and with a little time and due diligence should be able to come up with a viable plan for the next quarter of their business.