What Challenges Are Arising Against Tesla Motors' Stock?

Tesla Motors (NASDAQ: TSLA  ) stock is down since reporting earnings, but fundamentally nothing has changed about the company. In fact, it's investors who got ahead of themselves in valuing this stock. 

The true challenges for Tesla come in the next few years as other automakers introduce increasingly competitive vehicles. Ford (NYSE: F  ) is betting that its Focus Electric can give it a foothold in the market and Nissan and GM have eyes on the electric vehicle space as well. But the biggest competition may be coming from Germany, where BMW's i8 is being developed with specs that can match the performance of the Model S in many ways. If BMW can get it right, then Tesla's monopoly on high-performance EVs will be over. 

Erin Miller sat down with Motley Fool contributor Travis Hoium to hear just what investors should be watching for in the future.

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  • Report this Comment On November 15, 2013, at 2:34 PM, rdalcanto wrote:

    I'm sorry, but the premise of the article is incorrect. The BMW i8 is not direct competition for Tesla. The i8 is more of a hybrid, with very limited range and performance in electric mode. It also has limited seating for 4, and little storage space. Someone who is looking for a high performance sedan with seating for 5-7, usable trunk space, and no fuel tank to fill, will not be interested in the BMW. There is still no real competition for Tesla on the horizon in the high performance, electric vehicle market.

  • Report this Comment On November 15, 2013, at 3:33 PM, rdalcanto wrote:

    I'm sorry, but the main point of your article is incorrect. The BMW i8 is not an electric car. It is really a hybrid, with minimal range and poor performance in electric mode. Furthermore, is has limited seating for 4 people, and little trunk space. Someone who is interested in a Tesla Model S because of superior performance, seating for 5-7 with lots of storage space, and gasoline/diesel free driving, is NOT going to buy an i8. Tesla still has no competition on the horizon for 5+ years in the high performance, long range electric vehicle sedan and SUV market.

  • Report this Comment On November 16, 2013, at 12:32 PM, lem2004 wrote:

    @rdalcanto What makes you think that there will not be any competition in the next 5+ years.The tesla fan boys need to get their heads out of the sand.The company hasn't even made any money yet,and may not for a long time.

  • Report this Comment On November 16, 2013, at 2:15 PM, sanjath wrote:

    BMW i8 is probably a competitor to the first generation Tesla Roadster, which is discontinued, but that said, I think Tesla has challenges to go beyond the highly receptive niche audience they have currently. Car may be very good, but it isn't like iphone introduction to get such a high market cap. To me biggest thing that restricts it's wide spread adaption is speed of charging, Tesla can't succeed with their custom charging stations built and maintained by them. It may be very good for a luxury segment, but when you get into 20-30k car market, the cost of operating such special facilities become questionable strategically and even logistically (can you imagine any gas stations along route 5 betn SF-LA taking 30 min to fill each car?)

  • Report this Comment On November 16, 2013, at 4:11 PM, deeageaux wrote:

    @Sanjath Tesla has upgraded the Supercharger technology twice already. Introduced at 90 kwh then upgraded to 120 kwh then 135 kwh. Tesla will not be selling 10M vehicles overnight. As the sales grow so will the supercharger network. It is targeting 200 miles of recharge within 5-10 minutes in the next 7 years. You can get 180 miles in 20 minutes right now.

    @lem2004 The company has made money. GAAP does not have a category for the hybrid sale/lease option that Tesla offers. It has to book their sales as leases assuming all owners will invoke their option to sell back their cars to Tesla and Tesla will not make money selling the used Model S. Plus, Tesla gets all the money up front not over 36 months as a 36 month lease assumes. Cash flow positive. Cash and cash equivalents up $49m despite aggressive expansion in Europe.

    There is BEV competition and there will be in the next 5+ years but serious completion is doubtful. No one is taking long range BEV seriously. GM continues to believe that Volt technology is the technology for the next 20 years or so. Toyota is cancelling their RAV4 BEV and believes hydrogen Fuel Cells are the future and so does BMW. Volkswagen believes in clean diesel. Ford had decided to be a follower in clean vehicle technology. Honda supports compressed natural gas and hydrogen fuel cells. Renault-Nissan believes in their short range affordable BEV technology and that most drivers will adjust. You buy a Leaf for everyday and rent an ICE for long trips. Chrysler-Fiat is dragging their feet. Daimler has Bluetec diesel tech and seems to be hedging its bet by partnering with Tesla for the B-Klasse with Tesla drivetrain and looking for more cooperation with Tesla. There is nothing compelling among other small auto manufacturers.

  • Report this Comment On November 16, 2013, at 5:34 PM, Decoy0527 wrote:

    That the Tesla crowd so fervently believes that it can go from a true believer small niche market to a mass appeal market with little competition is a mystery to me. How can they possibly believe that a mass market product can continue to have those margins? BMW, Toyota, Mercedes, and Audi are world class companies with tremendous financial capacity They are not going to be onlookers if the products does actually come to have mass appeal.

  • Report this Comment On November 16, 2013, at 8:22 PM, deeageaux wrote:

    @Decoy Eventually, BMW, Toyota and Mercedes will see the light. To a science illiterate MBA it may seem prudent to invest in many zero and low emission powertrains. To the science educated person there is a 95% chance that BEVs will dominate the future. There always is the possibility of unseen revolutionary scientific breakthroughs. Barring that,once BEVs are proven governments in CA and Germany will demand more ZEV. Eventually, new ICE vehicles will be banned.

    By that time Tesla will have first mover advantage firmly cemented. Not to mention the huge advantage having the Supercharger network.

    1960 Automotive discussion. If 4 cylinder subcompacts actually do ending up getting mass appeal how can Toyota, Honda, and Datsun compete with world class companies like General Motors and Ford with their tremendous financial capacity? Large companies fail and start-ups become global giants. It is the very creative nature of global capitalism.

  • Report this Comment On November 18, 2013, at 1:05 PM, tombland wrote:

    I couldn't agree more with rdalcanto and deeageaux.

    The premise of this article and the supposed threat of BMW's i8 is very misguided. I'm sure the i8 will sell a few cars but it's not a competitor to the Model S – they're different cars ENTIRELY.

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