3 Reasons Tesla Motors Will Dominate in 2014

Tesla Motors (NASDAQ: TSLA  ) celebrated a record year in 2013, with the stock surging nearly 350% during the year. That's a serious improvement over Tesla's gain of just 7% in 2011. The electric-car maker passed many milestones along the way, including reporting its first quarterly profit and winning the academy award of autos as its zero-emissions Model S took home Motor Trend's 2013 "Car of the Year" award. With the stock growing in value from $32 at the start of 2013 to where it trades today, around $147, it's hard to imagine there's much upside left in the name.

However, these three catalysts should move shares of Tesla higher in the new year, despite investors' soaring expectations for the stock.

Ballooning deliveries
This year, Tesla is on track to deliver more cars than ever before. The EV maker's CEO, Elon Musk, is confident that Tesla can hit an annualized rate of deliveries that exceeds 40,000 cars per year by late 2014. To put this in perspective, that amounts to roughly double Tesla's anticipated output rate of 20,000 cars in fiscal 2013.

In fact, Tesla looks to be ahead of the mark as the company now expects to deliver 21,500 vehicles worldwide for fiscal 2013. Moreover, Musk has a track record of under-promising and over-delivering. Therefore, I wouldn't be surprised if Tesla were to ramp up production even faster in the year ahead.

International expansion
Tesla should unlock even more growth in the quarters to come as it expands operations overseas. The company is still in its infancy, and expanding into new markets, such as China, should help Tesla boost sales. The California-based company began taking reservations for its Model S in China last quarter and plans to make its first deliveries in the Asian country during the first quarter of 2014. In fact, Musk expects to have a handful of Model S cars on a boat to China as early as this month. 

As the world's biggest market for premium sedans, China is an important market for Tesla. Of note is the fact that Tesla has already passed all of the homologation requirements in China, and launched a soft opening of its Beijing showroom in the region that was greeted with great fanfare. Meanwhile, the company has already received "hundreds of orders" for its Model S in Hong Kong, according to Bloomberg.

Source: Tesla Motors.

Additionally, the automaker continues to expand its Supercharger network, in both the United States and abroad, at an impressive clip. Tesla plans to have supercharger stations covering 80% of the U.S. and parts of Canada this year. On top of this, Tesla says it can cover 100% of the population of Germany, the Netherlands, Switzerland, Belgium, Austria, Denmark, and Luxembourg with Superchargers by the end of 2014. 

While these stations create tremendous value for Tesla drivers, they don't cost the company as much as many investors might think. Thanks to a strategic partnership with SolarCity (NASDAQ: SCTY  ) , to supply the solar panels that help power Tesla's supercharger stations, Tesla is able to deploy these stations at a fraction of the cost. Investors can also expect Musk to make a cross-country trip in a Model S later this year using these Superchargers. Ultimately, more Superchargers in more locations should help fuel greater EV adoption.

Model X market debut
The third catalyst for the carmaker this year is the much-anticipated debut of Tesla's Model X crossover vehicle. Tesla will begin deliveries of its Model X in late 2014. Thanks to the success of its Model S, there's already a strong brand presence for the company. This should help boost sales of its crossover vehicle as more Model X cars hit the road later this year.

Blending the benefits of a minivan with the performance of a sports car, the Model X promises to a big hit with drivers in 2014. Built on the same drivetrain as Tesla's Model S, the Model X can go from zero to 60 miles per hour in 4.4 seconds. Tesla first unveiled the all-electric SUV in February 2012, and last year pushed production of the Model X into late 2014 to accommodate sales of its Model S vehicles. Moreover, shares of Tesla should pull ahead later in the year if Tesla can deliver on its revised promise of getting the Model X on the road in 2014.

With these catalysts, together with Elon Musks' visionary leadership, I expect Tesla to achieve another record year in 2014.

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Read/Post Comments (13) | Recommend This Article (15)

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 January 04, 2014, at 11:17 AM, sabebrush6 wrote:

    Oh, yeah, did he mention that Tesla also builds a great car ?

  • Report this Comment On January 04, 2014, at 1:00 PM, ElHefe wrote:

    It's still a car made just for the 1%, who have that kind of money to spend on a car. My understanding is that the battery cost about 12K to replace with a life of about 8 years. Also the materials to build these batteries is a rare and difficult to extract from the earth, do I don't expect the price to come down. My other question is where will they dispose of all the old batteries once they need to be replaced. An article on Yahoo about a month ago indicated that fuel cell cars will hit the market this year and cost a fraction of a battery powered car.

  • Report this Comment On January 04, 2014, at 3:22 PM, rotorhead1871 wrote:

    battery cars are going to be run out of town by fuel cells.....batteries are never going to be primary power sources......batteries are very messy to make and dispose of......never going to happen.....HYDROGEN IS CLEAN CLEAN CLEAN.....

  • Report this Comment On January 04, 2014, at 3:47 PM, SteveTG3 wrote:

    As to sustainability of batteries...

    Elon Musk's answer to this very question starts 1:50 into this video, (preview, no scarcity of raw materials, excellent recycling opportunity oil just does not offer).

    https://www.youtube.com/watch?v=rce5RZHCzLk

    As to hydrogen fuel cell cars, Toyota, leading the way, is hoping around 2030 they will be price competitive with EVs. So says Soichiro Okudaira, chief officer of Toyota's R&D group, link below,

    http://www.greencarreports.com/news/1089085_hydrogen-fuel-ce...

  • Report this Comment On January 04, 2014, at 6:57 PM, arondaniel wrote:

    "HYDROGEN IS CLEAN CLEAN CLEAN....."

    And it's generated from gas gas gas, obtained by fracking fracking fracking. Not so clean after all.

    And as a reward for all the drilling, transport, storage & fueling infrastructure, you also get:

    * An EV with a battery anyway. A fuel cell by itself isn't powerful enough.

    * Less usable energy than if you just generated electricity from the natural gas.

    * A very very dangerous gas that is prone to leaking and exploding in your garage.

    So, good luck with that.

  • Report this Comment On January 04, 2014, at 8:08 PM, djplong wrote:

    First - Lithium is called a "rare earth element" because it's not found in veins like gold is. "Rare earth" doesn't necessarily mean it's REALLY "rare".

    Second - the batteries ARE recyclable and are lasting more than 8 years (Tesla Roadster batteries are still doing well). They have an 8-year *guarantee* on them.

    Third - the fuel cell is still VERY expensive and generates - electricity. Why put a generator on board with a tank full of *hydrogen* when you can use a simple battery? You think lithium is flammable? At least that *burns* - it doesn't violently explode! (The three Tesla car fires were all after accidents and all owners walked away). They're going to have to make a dirt cheap fuel cell AND solve the weight problem you'll get when making a hydrogen tank that's built like, well, a tank.

  • Report this Comment On January 05, 2014, at 12:48 AM, iamvoltron wrote:

    How can TSLA "dominate" in 2014?

    TSLA can only produce 40 to 50k Mosel S cars in 2014, that's common knowledge.

    The Model X mentioned in the article will only be in full production by calendar Q2 2015.

    Probably only a hnadful of Model X will be delivered in te 2014.

    I wouldn't call either of these numbers "domination".

    TSLA still is a niche auto company with a huge valuation that takes into account their revenue in 5-10 years if all goes according to Tesla's plans.

  • Report this Comment On January 05, 2014, at 2:16 AM, shineridge wrote:

    Electric cars won't be practical for average people for many, MANY years, if ever. Tesla will probably only be in business as long as someone SUBSIDIZES them, because there simply isn't enough demand for their cars.

  • Report this Comment On January 05, 2014, at 12:45 PM, CrazyDocAl wrote:

    What is this, an ad for Tesla? Production isn't booming, it's slightly better than flat. Sure if you look at last year at this time and compare it to now things look great but after the summer of last year sales are around 5500 cars a quarter. Once you factor in the number of cars sold in other countries that weren't in the first half of last year sales are actually dropping off in the US.

    Production capacity is also a red flag. Tesla is not on track to do more than double capacity this year. That's a far cry from 100k cars. Right now they will be about 40k to 50k cars and that's going to be both the S and the X. If you remove the X and sales figure may be flat, like it has been since summer of last year.

    I don't know who thinks that Tesla's sales numbers qualify for the adjective "dominates". The only reason for that word to be used is for advertising. Next year as more and more offerings for EV make their way to dealerships one has to think that Tesla will need all the good PR it can get.

  • Report this Comment On January 05, 2014, at 12:56 PM, CrazyDocAl wrote:

    diplong, Lithium may not be rare but neither is gold. You can find gold in every state in the US. However you wouldn't go to Vermont to mine gold. The same is true of Lithium. The only place it make economic sense to recover is where it's concentrated, those locations are rare.

  • Report this Comment On January 05, 2014, at 7:18 PM, EdwardInFlorida wrote:

    @CrazyDocAl. Lithium is actually very plentiful in some countries such as Bolivia, and Afghanistan. I read some of your remarks, and I must say your moniker fits you very well. Think I'm kidding? I wish I could say I am but I'm not.

    In reading comments from a few other readers I get the impression that their thinking process goes something like this. "I can't afford it so I have to trash talk about it". I feel so sorry for you guys but Tesla is going to continue to move on and build this market.

    They are now delivering about 600 cars per week, and there is still a waiting list of 3-4 months unless you are buying a top of the line P85+ in which the delivery date can be as little as a month, so to the commenter who said "Tesla sales a little over flat", you're nuts! Get a life!

  • Report this Comment On January 05, 2014, at 8:03 PM, damilkman wrote:

    I disagree with the authors premise. The stock is already priced presuming a successful roll out of the Model X. There is a cap on the luxury market. The only way I would want to be a long term buy is if I believe Musk can pull off the same margins selling a car to the masses.

    Correct me if I am wrong. I have heard that the average sale price is 100K for model S cars that begin at 70K. That tells me that money is not an object for those making the purchase. Depending on 15K of add ons to a 30K car is not going to cut it.

    No one on this board has a clue what the cost structure of such an automobile is going to be or what happens when Tesla has to split resources over several product lines. For the longs, you have faith. For the shorts you do not.

  • Report this Comment On January 06, 2014, at 6:42 PM, ifool100 wrote:

    I think most of the good Fools who are doubtful have not driven one. This baby is disruptive. The Tesla is "just a car" like Starbucks is "just a cup of coffee". Valuing TSLA is like trying to value Starbucks in '94, Amazon in 1998 or Netfix in 2005. It's hard to get your head around it until you drive it. Once you've driven one, everything else is slightly disappointing, if not primitive.

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