Tesla Motors Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electric vehicle maker Tesla Motors (Nasdaq: TSLA  ) zoomed as high as 12% in intraday trading after selling a $30 million stake to Japanese electronics giant Panasonic (NYSE: PC  ) .

So what: Panasonic, which will acquire about a 2% stake in Tesla, said the two companies will combine efforts and sell battery packs for electric cars. Daimler and Toyota (NYSE: TM  ) have already made sizable bets on Tesla, so investors are taking the Panasonic deal as yet another powerful endorsement of Tesla's technology.

Now what: Tesla may eventually turn out to be a good green idea, but it seems too risky right now to get involved. While the recent big-boy buy-ins lend some credibility to Tesla's potential, the company hasn't been profitable since it was founded in 2003. With no real manufacturing experience and only 1,000 of its high-end cars sold, it's tough to envision how Tesla will ever have the edge over increasingly green-focused auto giants like Ford (NYSE: F  ) and Nissan.

Interested in more info on Tesla? Add it to your watchlist by clicking here.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Ford is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (6) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On November 04, 2010, at 4:35 PM, steelkickn wrote:

    "With no real manufacturing experience and only 1,000 of its high-end cars sold, it's tough to envision how Tesla will ever have the edge over increasingly green-focused auto giants like Ford (NYSE: F) and Nissan."

    How indeed. blah blah blah. All you haters are now slowly backtracking off your skewering reviews of TSLA. But as more and more top companies invest heavily into them, the pundits are covering their behinds. hilarious. Watch and wait as the ship sails on you.

  • Report this Comment On November 04, 2010, at 5:05 PM, fljkto wrote:

    If you know anything, today's move was a SHORT SQUEEZE, not a big-boy buy-in, because this is such a good company to invest in. Let's see what happens on 11/9 when they report their earnings!

  • Report this Comment On November 05, 2010, at 11:12 AM, rbtrader wrote:

    fljkto has it right, this was a short squeeze. There are very few shares availalbe to borrow, and the institutions that own the stock are having fun calling in their stock, creating a short squeeze. One thing that is becoming evident however, is Tesla is going to be a battery pack maker more than a car manufacturer. Their future as a car maker has always been suspect, however Panasonic has some new battery charging technology that they obviously want to combine with Tesla's ability to make a cooling package for the car battery. I have warned in the past about shorting Tesla, and it has nothing to do with Tesla's ability to survive.

  • Report this Comment On November 05, 2010, at 2:52 PM, SleepingDog355 wrote:

    I think if you cataog a history of blogs about testla it would look something like this:

    - Despite surging stock and increased credibility, too risky

    - Tesla Stock hasn't moved past $21, it will crash soon

    - Tesla will offer an IPO, stay away

    - Tesla isn't sufficiently capitalized

    - Tesla doesn't have manufacturing capability

    - Tesla doesn't have sufficient talent

    - Tesla only makes a niche car, and will always be a niche company.

    - Tesla will never sell a Roadster, not feasible.

    Seriously, how many times do the naysayers have to be proven wrong?

  • Report this Comment On November 05, 2010, at 4:58 PM, TMFMarlowe wrote:

    There's another way to look at this: TSLA was already committed to using Panasonic's batteries. Why might that drive a (fairly small, really) investment from Panasonic?

    John Rosevear

    ps: Pay attention to what rbtrader said above, and consider that a) the main knock on Tesla is that they have (arrogantly and cluelessly) bitten off much, much more than they can chew, and b) making and selling battery packs is a whole lot easier than making and selling cars that can compete against the global giants.

  • Report this Comment On November 05, 2010, at 10:43 PM, TMFMarlowe wrote:

    @SleepingDog: I've probably been the Fool's leading TSLA skeptic. I will consider myself "proven wrong" (and I will admit it, if and when) when the company successfully mass-produces -- at a profit -- a car that can compete on quality and price with the global leaders' products in its segment. That means a $60k Model S, assuming there ever really is such a thing, has to go head to head with a Lexus GS, a BMW 5 Series, and a Mercedes E Class -- and come out looking good.

    I don't think they can do it. I don't think a Model S that's sufficiently equipped to live up to Musk's hype will sell for much less than $100k, and I don't believe it will compare well with the big-name competition in an objective test. And what's more, nobody with any real knowledge of the auto business believes it, either.

    What has the attention of companies like Toyota is the range that TSLA has managed to get out of the Roadster using what are essentially laptop computer batteries. (Also, and probably more to the point, Toyota will want that factory back if and when Tesla fails.) To the extent that Tesla has a realistic business opportunity, battery systems are probably it.

    John Rosevear

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