Is This Tesla Motors Inc (TSLA)’s Toughest Challenge Yet?

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Looking ahead, Tesla Motors Inc (NASDAQ:TSLA)’s toughest challenge isn’t competitive threats from General Motors Company (NYSE:GM) or other traditional automakers. Instead, the problem is battery technology. At a Tesla event in July, Musk explained that lithium-ion cell production is one of the company’s biggest challenges going forward .

At this point, Panasonic is responsible for supplying the majority of battery cells for Tesla Motors Inc (NASDAQ:TSLA)’s Model  S. However, as Tesla continues to ramp up production, it may think about adding more suppliers. The company is currently considering a variety of options, including building out its own battery manufacturing plant .

As Musk recently said, “When our third-generation car is being produced and our factory is producing half a million cars a year, we will exceed the entire laptop industry by a decent margin, and new battery factories will need to be built .”

This could create some interesting manufacturing opportunities in the U.S. Nevertheless, the real challenge for Tesla Motors Inc (NASDAQ:TSLA) going forward will be battery technology and supply, not competition. Ultimately, Tesla needs to continue innovating if it wants to remain ahead of rivals in the space.

The article Is This Tesla’s Toughest Challenge Yet? originally appeared on Fool.com.

Fool contributor Tamara Rutter owns shares of Tesla Motors. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors. 

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