Is This the Future of Tesla Motors?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Tesla Motors (NASDAQ: TSLA  ) is one of the most innovative and forward-thinking companies in the auto industry today. Still, with accolades like Motor Trend's Car of the Year and a stock price that's increased more than 400% year to date, Tesla refuses to rest on its laurels. If anything, it can't really afford to.

We already know the company plans to sell its first all-electric SUV, the Model X, next year. It intends to follow that with a $35 ,000 electric vehicle for the masses. However, much of this is already baked into the stock's $21 billion market cap .

To put it in context, that's nearly one-third of Ford's (NYSE: F  ) market value. Yet, Ford generated more than $3 billion  in free cash flow last year, while Tesla was stuck in the red .

The takeaway here is simple: At its current valuation, Tesla's future largely depends on its ability to continue innovating.

Source: Twitter.

Fast-track to the future
The autonomous car could be Tesla's ticket to sustained success. The company's CEO, Elon Musk announced on Twitter this week that it is working on an autopilot system for its Model S car . Though Tesla joins dozens of other auto manufacturers in developing a driverless experience, Musk is focused on creating a sort of autopilot, as opposed to a fully autonomous car. In an interview with Bloomberg, Musk said: "Self-driving sounds like it's going to do something you don't want it to do. Autopilot is a good thing to have in planes, and we should have it in cars."

Tesla now hopes to make this a reality. In fact, Musk is confident that the company can deliver a (mostly) driverless car within three years, reports the Financial Times. That's much sooner than projections from other automakers, including Nissan, which says it can deliver a semi-autonomous car by 2020 . Google (NASDAQ: GOOGL  ) , on the other hand, hopes to make its technology production-ready within five years .

Source: Twitter.

Not only does Musk expect Tesla to get this technology to market sooner than others, but he also plans to employ a more affordable technique. "The problem with Google's current approach is that the sensor system is too expensive," Musk explained . Tesla's technology will likely use a combination of radar and tiny flush-mounted cameras. This is a different approach from Google (NASDAQ: GOOGL  ) , whose self-driving cars currently use expensive laser tracking systems that are mounted to the vehicle's roof .

Source: Wikimedia Commons

A new job listing on Tesla's website calls for an engineer "responsible for developing vehicle-level decision-making and lateral and longitudinal control strategies for Tesla's effort to pioneer fully automated driving ." At least for now, this is a good indication that Tesla plans to develop such capabilities in-house, rather than collaborating with a company such as Google.

Whichever way you cut it, self-driving cars are the future. And given Tesla's track record up to this point, there's a good chance Musk's company will be at the forefront of this change.

Read/Post Comments (4) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 19, 2013, at 8:40 PM, poornamelessme wrote:

    May wish to use spellcheck. At the end of first paragraph:

    "If anythiung, it can't really afford to."

  • Report this Comment On September 19, 2013, at 9:07 PM, pwkrp wrote:

    @ poornamelessme,Some people find fault like their is a reward for it.

  • Report this Comment On September 19, 2013, at 9:58 PM, BloviationNation wrote:

    Its sad that Elon has to face two of this countries wealthiest and most powerful DC lobbies. With their extensive coffer$$$ Big Oil and the National Automotive Dealers Association (NADA), both of whom are in bed with each other on this, are quite influential in DC. Politicians love money and the "entity" with the most has been getting their favor (look at what just happened in Texas and North Carolina). Americans need to know that the NADA and their network of dealers would not be a necessary part of the car buying equation if it were not for the existence of archaic state franchise laws. Its these laws that create the opportunity for the existence of car dealers and force you to have to go through them. These laws are beginning to crumble as more and more Americans discover the truth about car dealers and what the NADA is doing with politicians behind closed doors. The NADA is fighting to keep these unjust laws on the books because they and their network of thieving dealers cannot exist without them. Support Elon. Expose the NADA and the politicians that take their money to keep on the books laws that screw the American people by making them pay an extra 6-9% over the manufacturers real price. Google "White House petitions Tesla" and sign the one supporting Elon or continue to bend over for the NADA and their thieving network of car dealers.

  • Report this Comment On October 01, 2013, at 9:11 PM, miltonsands wrote:

    I think Elon will overcome the hurdles. This will be the most successful car company ever. Think of it u don't pay at the charging station. To hell with the tricksters in Washington hooray for clean energy which will subdue the masses and Tesla will be the next Apple....

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2646430, ~/Articles/ArticleHandler.aspx, 9/29/2016 4:42:36 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
TSLA $200.70 Down -5.57 -2.70%
Tesla Motors CAPS Rating: **
F $11.97 Down -0.12 -0.99%
Ford CAPS Rating: ****
GOOGL $802.64 Down -7.42 -0.92%
Alphabet (A shares… CAPS Rating: *****