Monday, September 9, 2013

Demand and Supply: Tesla Model S

The Tesla Model S is a high performance, fully electric sedan designed to compete with other full size luxury cars like the BMW 5 series.  As the market for fully electric cars grows, it was only a matter of time before a high end model would be offered.  Since the Model S entered production in 2012, demand has easily outstripped supply and is still the case today.  The newest “problem” is that the company has grown too big for its current factory and needs to expand.  Tesla needs to begin meeting demand for the Model S not only in the US but also Europe and Asia as well as beginning production on the Model X (fully electric SUV).

In order to do this, additional manufacturing capacity will be needed and the key issues will be (1) where the company will expand manufacturing and (2) by how many units their weekly production should increase.  Both of these must be decided while maintaining the market position and image of the Model S.

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