Big Milestone for Tesla; Is It a Buy?

In today's edition, industrials editor/analyst Brendan Byrnes discusses Tesla and the much-anticipated launch of its Model S sedan tomorrow. Tesla has done a great job ramping up Model S production, and it expects to deliver more than 5,000 of the sedans this year and sell 20,000 next year. That's ambitious, but it would be great news for Tesla, which estimates it will be cash-flow positive after 8,000 sales.

Still, significant questions remain. What happens if Model S sales slow down? Can Tesla produce an affordable vehicle by 2015 like it says it can? And, perhaps biggest of all, can it convince a still-skeptical public to embrace EVs despite range and infrastructure issues? All these questions lead Brendan to rate the Tesla a hold; it's performed incredibly well so far, but too many questions still remain. Check out the video below for more on Tesla and the Model S launch, as well as the company's future prospects. 

Tesla is a classic high-risk, high-reward pick. If you're looking for a less risky stock that still has serious growth prospects, then you should check out our new free report, "The Motley Fool's Top Stock for 2012." In it, our chief investment officer identifies his favorite company for the year. To access the report before the rest of the market catches on, click here -- it's absolutely free.

Brendan Byrnes owns shares of Ford and General Motors. The Motley Fool owns shares of Ford and Tesla Motors. Motley Fool newsletter services recommend Ford, General Motors, and Tesla Motors . 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 Motley Fool has a disclosure policy.


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  • Report this Comment On June 22, 2012, at 8:43 AM, jimillo wrote:

    Brendan, in the video you make two very misleading statements about the Chevy Volt: [the Volt's] "range is 35 miles, not many people buying that", and [the range of Tesla Model S is] "better than the Volt". The Chevy Volt is now going into it's third model year, and I'm shocked how clueless some people seem to be.

    I have owned a Volt for nearly a year and half. Every morning after charging it I start my Volt and it shows a range of OVER 400 MILES. This is over 10-times more than your claims. And this is based on real-world driving (the Volt bases it's displayed range on user's driving patterns). Believe me, I don't baby my Volt - I almost always drive it in 'Sport' mode, and love the silent, intense acceleration.

    Don't you understand that the Volt also has a gas powered range-extender that takes it well beyond the 35-mile electric range? I haven't put any gas in my Volt since April (when I took my last long trip), meaning I haven't used nearly any gas since then. I do use gas occasionally. For example, last Sunday I drove my Volt 60 miles, with a partial re-charge between the morning and the afternoon. Total gas used for 60 miles of driving? 0.17 gallon. Basically, I (and most Volt owners) only use substantial amount of gas when going on long trips.

    Disclaimer: I own a little GM, and a lot of TSLA.

  • Report this Comment On June 22, 2012, at 9:52 AM, bloggerone wrote:

    @jimillo

    I probably should have been more clear that I was talking about the electric range for the Volt, sometimes it's easy to gloss over things in videos. My point was that if EVs are going to become mainstream, they have to get cheaper and/or improve their electric range. The Model S is a big step towards one of those with its 160 mile electric range on the base model. Right now, I think it's hard for a lot of people to justify spending much more money on a Volt versus a traditional hybrid when you get 35-38 miles on an electric charge (though that's sufficient for most drivers plus you have the gas generator backup). Not saying that's right or wrong, but that's part of the perception and I think a main reason for the poor sales numbers.

    Thanks for watching.

    Fool on,

    Brendan

  • Report this Comment On June 22, 2012, at 11:06 AM, jimillo wrote:

    Thanks for the explanation Brendan. I get a little sensitive because I have had enough people say "So, you get stuck after 35 miles!". Even those who understand a little about the Volt will say, "You have to recharge after you run out of gas, and that takes hours."

    Anyway, I think that Tesla, although speculative to be sure, is potentially a great company. IMHO the Roadster got them past the teething stage, and now they have a vehicle that is second to none (except for cross-country trips). I'll be curious to see if Tesla ever puts a range-extender option in any of their vehicles. Both the Model S and Model X have a generous 'frunk' that could probably house a generator.

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