Trying to figure out the future of Tesla Motors (NASDAQ: TSLA) has invoked mixed opinions as the goal of the electric carmaker remains to be seen. On the one hand Tesla is preparing to take on the giants of the auto industry with the 2012 release of their Model S sedan, an electric car that they say is capable of getting 300 miles per charge, while on the other hand Tesla has been adding some pretty impressive names to their list of investors including Mercedes parent Daimler, Toyota, and most recently Panasonic and those companies are more than likely interested in the Tesla’s technology and not their electric vehicles sitting in a showroom.
As it stands Tesla already has one vehicle on the streets, the Roadster, which can hit 60 mph in 3.7 seconds, get 245 miles per charge, emits zero-emissions and can be plugged into nearly any outlet anywhere in the world. Of course with a starting price exceeding $100,000 the electric car isn’t quite as ubiquitous as the Toyota Camry.
The idea of the Model S sedan is to put a more affordable electric vehicle on the market, a starting price around $50,000, and challenge the popularity of hybrid vehicles like Toyota’s Prius as well as electric vehicles like the new Nissan Leaf and part-time electric Chevrolet Volt. With more than just an air of confidence, Tesla’s CEO Elon Musk has consistently said the company is capable of manufacturing electric vehicles that will challenge not only the hybrid/electric elite but the gas engine giants in Detroit as well.
That may be easier said than done as mass-producing vehicles is no simple undertaking yet Musk, for those of you who have forgot, was a co-founder of PayPal as well as SpaceX and those two companies have done alright. As impressive as those two companies are the auto industry is a different animal when the Model S hits in 2012 it will already have competition as the Leaf debuted last Friday and the Volt is expected to do the same later this month, giving both vehicles a solid year to build a strong following before Tesla enters the fray.
Of course Tesla isn’t just about manufacturing electric cars, the company is widely respected for their battery technology and expertise in the electric car market and that is what attracted first Daimler and the Toyota. These auto giants want Tesla’s battery capabilities in their own electric vehicles and it’s an avenue that could pay Tesla well and has already led to rumors of a potential buyout.
That wouldn’t be a likely scenario right now though as Tesla is coming off an incredible month of November in which shares rose from $21.41 on the first to $34.33 at the close on November 30, a spike of more than 50% for a company that has yet to produce a profit and actually booked a $34.9 million loss for the third quarter in 2010. Notwithstanding they announced a $30 million investment from Panasonic on Nov. 3 which peaked investor interest enough to keep shares climbing.
Tesla already has deals in place to develop and sell battery packs and chargers for an electric version of the Smart Fortwo as well as the Mercedes A-Class and they will also be providing the technology behind Toyota’s plans for an electric version of their popular RAV4 SUV model. The problem being pointed out right now is that while Tesla’s Roadster is able to boast of 245 miles per charge it comes at a cost and it’s not feasible to think that those interested in a RAV4 would be willing to shell out twice the amount of money for the electric version.
Perhaps the strength of Tesla’s technology won’t be fully realized until the Model S is unveiled. If it can find itself controlling the electric market in the same way the Prius has grabbed the hybrid market then they may find their fortunes back on the assembly line but even that could be a short run as the giants like Ford and GM will certainly look to challenge by pouring money into electric car technology.
What Tesla shareholders may be hopping for is that those larger auto giants come looking to Tesla technology for their electric vehicles. Whether that is in the form of a buyout or the purchase of battery technology it may be Tesla’s best shot at thriving because when looking at November’s success it is hard to put a finger on anything concrete that caused such a spike. That fortune won’t last much longer and if Tesla isn’t able to capitalize on what they have right now they could find trouble sooner than later.
Even with the positives that Tesla presents, especially with their battery technology, the electric car market is a battle with public perception. As it stands electric volt and hybrids will account for just over 2% of this year’s worldwide car sales and in many surveys car shoppers have expressed serious concerns about the reduced travel range that these vehicles offer. That brings to light the necessity for charging stations if these cars electric cars are to hit mainstream because it is highly unlikely that somebody will pay $50,000 for an electric vehicle that can only be used for trips to the grocery store or picking up the kids from school before plugging them back in at home.