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This Automobile Company Is Gearing Up for a Better Future

January 20, 2014 | About:

Tesla Motors Inc. (NASDAQ:TSLA) designs, develops, manufactures, and sells electric vehicles, and advanced electric vehicle powertrain components. Tesla cars are manufactured in a far different manner than traditional vehicles. They have one standard battery platform on which they can mount varying motors and bodies. The company stands at an advantage in achieving production efficiencies with its swappable production strategy.

Performance in 2013

The company celebrated a record year in 2013, with the stock surging nearly 350% during the year. That's a serious improvement over Tesla's gain of just 7% in 2011. The stock of Tesla Motors surged 16.3% to $162 per share after the electric carmaker revealed that vehicle sales in the fourth quarter of 2013 were 20% higher than estimated. The company sold and delivered 6,900 vehicles in the quarter, compared to the guidance of 6,000 units. Sales were also significantly higher than 5,500 cars sold in the third quarter.

Brighter 2014

In 2014 Tesla is planning more cars than ever before.  CEO Elon Musk is confident that Tesla can hit an annualized rate of deliveries that exceeds 40,000 cars per year by late 2014. Tesla will begin deliveries of its Model X in late 2014. Thanks to the success of its Model S, there's already a strong brand presence for the company. This should help boost sales of its crossover vehicle as more Model X cars hit the road later this year.

Blending the benefits of a minivan with the performance of a sports car, the Model X promises to a big hit with drivers in 2014. Built on the same drivetrain as Tesla's Model S, the Model X can go from zero to 60 miles per hour in 4.4 seconds. Tesla first unveiled the all-electric SUV in February 2012, and last year pushed production of the Model X into late 2014 to accommodate sales of its Model S vehicles. Moreover, shares of Tesla should pull ahead later in the year if Tesla can deliver on its revised promise of getting the Model X on the road in 2014.

Being a Game Changer

Tesla's charging stations aren't the typical electric vehicle charging station. On average, Tesla's Superchargers are about 16 times faster than most public charging stations. In fact, Model S owners can get a 50% battery charge in just 20 minutes at a Supercharging station. Its $20 billion valuation means that management has even more cash than they had planned for to make the necessary investments, or even ramp up production and expansion more rapidly. Tesla's business model of selling directly to consumers is another factor that sets Tesla apart from traditional automakers.

The outstanding performance of Model S in cold weather also contributes to its rising demand. The high traction control provided by its electric powertrain leads to better performance of the car in snow and ice, compared to a gasoline powertrain. As a result, Tesla has the highest per capita sales in Norway.

China Being an Important Market

As the world's biggest market for premium sedans, China is an important market for Tesla. It has launched a soft opening of its Beijing showroom in the region that was greeted with great fanfare. The company has already received hundreds of orders for its Model S in Hong Kong. It is one of the most innovative and forward-thinking companies in the auto industry today.

Tesla’s future is largely dependent on its ability to continue innovating. U.S. markets are saturated. Tesla and other automakers are looking for international customers for explosive growth, particularly in China. An investor may get rich with this growing trend as the automakers are poised to surge with China’s middle class. China is already the world's largest auto market - and it's set to grow even bigger in coming years

To End

Entering the vehicle market without the normal constraints and biases that bog down traditional manufacturers has helped this California-based company become a wild success in the car market. All these factors are building the foundation for the company's eventual mass-market affordable car. And each factor helps to secure Tesla's spot among the big automotive companies, and change the auto industry forever.

Meanwhile, the demand for Tesla’s cars remains strong on robust performances and impressive designs of its products. Model S ensures the least possibility of injury to passengers among all major car makes and models in the U.S. The car won a five-star vehicle safety rating from the National Highway Traffic Safety Administration, which is awarded to only 1% of the cars tested.

Rating: 4.5/5 (12 votes)


SeaBud premium member - 3 years ago

All those words and not a single look at the balance sheet or P/L statement. Much less a look at the stock price relative to those items. Is Tesla a buy at $1, $100 AND $1,000/share? I dearly hope hybrid cars succeed, be they Tesla made or made by others.

Tesla happily proclaimed it sold less than 7k cars in Q4 and has a market value of $21B, while GM sells over 2 million cars a quarter with a market cap of $53B. Scaling Tesla to sell millions of cars at an affordable price is NOT a given (especially given issues with manufacturing Lithium batteries) - and the current stock price reflects perfect execution in the near future. Love the company, wouldn't touch the stock at this price.

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