Tesla's Affordable Car Could Reward Investors

Tesla Motors (NASDAQ: TSLA  ) CEO Elon Musk has some ambitious aspirations for the electric-car maker. His aspirations for an affordable car, in particular, have received a lot of attention. Given the company's execution so far, it seems likely that Musk can deliver on his promise at some point in the future -- but is this car already priced into the stock?

Fool contributor Daniel Sparks explains in the following video that the affordable car is priced into Tesla's stock -- but only to a degree. In a previous article, he explained that the company could generate as much as $880 million in operating income if it met the goals Musk has laid out. But now a recent report form Bloomberg shows signs that the company may be aiming even higher.

Tesla isn't the only growth stock stunning investors. This incredible tech stock is growing twice as fast as Google and Facebook, and more than three times as fast as Amazon.com and Apple. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!


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  • Report this Comment On August 25, 2013, at 3:45 PM, jamesdan567 wrote:

    Tesla's number one concern is battery supply. According to Elon, this week, Tesla is working with LG, Samsung and Panasonic to determine how to eliminate this concern. One possible outcome would be a massive giga-factory to be built to vastly expand worldwide Li-ion battery supply.

    Each car presently requires around 7000 AA Li-ion batteries from Panasonic. 15,000 cars takes 100 million of these, presently. Considering Tesla also announced plans to build more auto factories (at least 4 more), its safe to say Tesla plans to sell millions of Gen 3 cars per year. These may have a Gen 3 li-ion battery with a 500 mile range. We'll see on that...

    Obviously, none of this is priced into the share value yet. 2 million cars a year at 40K a car, is $80 billion of sales a year. Considering Tesla's growth rate and the stock market's love of growth, that will likely equate to a $240 Billion market value, more than 10X today's value. How likely is this outcome? By my book, its 100% certain. Why? The EV is 400% more efficient than the ICE car. By when? The stock market always discounts the future. Presuming 2million+ units a year output by 2021, the market value of $240Billion would likely be seen in 2018 at the latest.

  • Report this Comment On August 25, 2013, at 11:47 PM, CrazyDocAl wrote:

    Tesla is counting on a break though in battery technology that will drive the cost of batteries down. Without it there will not be a $40k Tesla that has the range of the S. Even at $40k the price will still be too much for most people to afford to spend on a car that's got limited use. Since Musk is on record saying that battery demand is going to go up, not down, the law of supply and demand will increase the price of batteries.

    Tesla is an interesting solution to a problem but it's not the only one or even the best one. With sales struggling to reach the target of 20k this year you have to wonder if Tesla had a short run of early adopters who now have their car. As Tesla expands world wide they should get another short spurt but will it last or will Tesla just be nothing more than another niche brand?

  • Report this Comment On August 26, 2013, at 12:34 PM, SkepikI wrote:

    I was mildly interested in the subject, but I refuse to watch or recommend MF videos with no transcript. So I will never know if your observations are worthy of my interest. What might be really intersting to speculate about is where Tesla and Pansonic are going with battery design. I know the people who did the testing of the batteries for Tesla, the batteries are just plain computer batteries optimized by Pansonic for laptops. Things might get REALLY interesting if Tesla's demand is high enough that Pansonic and Tesla start to optimize the design of these batteries for CARS....

  • Report this Comment On August 27, 2013, at 1:36 PM, sranger wrote:

    @crazyDoc

    Tesla is NOT struggling to meet sales, it is exceeding them. They have stated that they are selling about 500/week. They predicted 400/week.

    They recently actually raised the price a little on the cars more popular options...

    I hardly call that struggling...

    $40K for a 200 mile range EV will sell like hot cakes. It will most likely be 4-5 years before it is available. By then more people will be accustomed to the idea and benefits of owning an EV. It goes well beyond fuel savings...

    The supercharger network will be built out by then removing the last reasonable objection to the electric car...(Interstate Travel)

    It will be interesting to watch.....

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