7 Reasons I Invested in Tesla Motors Inc.

Companies like Tesla Motors (NASDAQ: TSLA  ) can be difficult to evaluate. With Tesla shares increasing well over 300% in 2013, to a $20 billion valuation, you may think the stock has seen its best days. My thinking shifted, however, after the company released exceptional preliminary figures for its fourth-quarter results. Tesla reported that it sold and delivered 20% more vehicles than it had projected for the quarter. 

The 7 reasons
My reasoning behind investing in Tesla -- and why I think the stock will continue to be a great investment over the long haul -- can be summed up by seven key points: 

1. Elon Musk is arguably one of the most visionary individuals on the planet. Not only that, but he is a gifted scientist and proven entrepreneur with an incredibly innovative mind. Musk owns over 20% of Tesla, so his money is where his mouth is. No one is more invested in the idea of Tesla (or the business) than Musk himself. 

2. 2014 marks Tesla's 11th year of existence. Tesla has only produced two vehicle models thus far: the Roadster and the Model S. Yet, even so, Tesla has already produced a vehicle considered superior to every other vehicle on the road (electric or otherwise). Consumer Reports gave the Model S its highest rating among all tested vehicles in 2013, and the Model S enjoys a five-star safety rating as well. If Tesla can produce a vehicle like that within 11 years, I have high hopes for the company's future innovations. 

3. Demand for Tesla's vehicles outpaces what Tesla can supply, without a dime going to marketing. Plus, Tesla has managed to increase its production capacity each quarter to meet rising demand. Look for this to continue as the Model X is released later this year. 

4. Tesla's rapidly expanding Supercharger network eliminates one of the primary preconceived problems with owning electric vehicles: convenience (specifically with charging the batteries). A father-daughter duo were recently the first drive across the U.S. "fueling up" only at Tesla Supercharger stations. Avid Tesla owners -- including Musk -- are planning the same trek this year. The Supercharger networks are rolling out in the U.S., Europe, and soon in China. In other words, it is becoming increasingly convenient to own a Tesla vehicle. 

5. Traditional automakers (Toyota, Ford, General Motors, etc.) have never competed with anyone like Tesla. Tesla is approaching automotive design, production, and distribution in an entirely new fashion compared to the industry stalwarts. I believe this gives Tesla a significant competitive advantage that is often overlooked.

Not only is Tesla already producing a superior product, it is producing and distributing its vehicles in a manner completely foreign to what automakers are accustomed to. Take a peak into a Tesla factory to see how unique Tesla's production process really is. Tesla sells vehicles directly to the public through its own stores and the Internet, rather than relying on dealerships like traditional automakers.  

Tesla's Supercharger network, already functioning (and quickly expanding) across many corners of the world, gives the company a leg up on competition. No other business has anything near Tesla's proven, established, and expanding infrastructure for electric vehicles. 

6. Demand outpaces supply for Tesla's $70,000 Model S. Imagine what this will look like with the $35,000 Model E in 2017. Tesla is currently in the process of developing a "Giga Factory" to mass-produce batteries for the Model E, which Musk anticipates to be the largest battery factory in the world. Seems like Tesla's innovation timeline is right on schedule. 

7. Tesla is producing increasingly affordable electric vehicles that are perhaps even more convenient (and reliable) than gasoline or hybrid vehicles. Tesla is truly aiming to transform the automotive industry, and it has a pretty convincing road map for how that transformation will occur. 

Foolish bottom line
So, with all that said, I felt comfortable starting a position in January. It can be discouraging to invest in a business whose stock has seen already seen incredible returns, but Tesla has hardly scratched its future potential. The stock is undoubtedly priced at a premium with a P/S of 13 and a forward P/E of nearly 300 based on analyst estimates, but Tesla's performance proves why the stock should be trading for a premium. If Mr. Market changes his mind and wallops the stock, great; I would welcome the opportunity to add to my position at more reasonable levels. 

Tesla has a lot riding on its future performance to continue its record as a market-beating investment. However, if you are confident that Musk and company can continue to execute as well as they have over the past several years, it may be sensible to open a position at today's levels. The stock will be volatile going forward, but I believe Tesla (the company and the stock) will prove to be a winner over the long haul.

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  • Report this Comment On February 05, 2014, at 10:43 AM, Pixma25 wrote:

    For decades car companies have based their business model on marketing to convincing people that the same old thing is actually new/exciting/innovative. Tesla's business model is to BE new/exciting/innovative.

  • Report this Comment On February 05, 2014, at 11:07 AM, wisdominvest wrote:

    The same thing isn't going to work so well anymore with high gasoline prices. Musk knows about Peakoil and his mission is to free the world from the oil addiction. Only 'problem' is ramping up the Lithium supply for the Giga Tesla battery factory

  • Report this Comment On February 05, 2014, at 11:15 AM, Hudson2 wrote:

    The battery factory is in the works. Elon states that it will cut battery costs 30% at a minimum, ideally 40%. This will allow for the Model E to come out profitably. Not only that, but it will allow for cheaper batteries (higher profit margins) on its current vehicles. 2016-2017, I will be on the waiting list! Competition cannot keep up because other companies are heavily invested in GAS cars. Going the other way toward electrics won't happen for many years, Tesla has a huge head start. If they keep giving what the people want (safety, performance, efficiency) with their next model, the sky is the limit. This is a clear IRA stock to hold for 30 years. The current price is almost guaranteed to go up if you give it time. Short term, it could go up and down. Buy on the downturns.Hold long term. Its a clear buy. Get in before the naysayers come on board. It is the doubters who keep the stock price this low. They will see soon enough what this company can do.

  • Report this Comment On February 05, 2014, at 12:01 PM, taballas wrote:

    Say Farwell to Our Old Friend the Internal Combustion Engine or

    Being Long on TSLA

    The Internal Combustion Engine (ICE) turns out to be a very poor energy converter to power our vehicles. Its success over the years has been the result of clever engineering to overcome its huge number of inherent disadvantages. Poor torque-add a transmission; makes noise-add a muffler; generates huge amounts of heat-add a radiator; generates pollution-add a catalytic converter; etc. etc. I’m afraid the disadvantages of the ICE will lead to its demise similar to what happened to the typewriter as a result of the invention of the word processor. For the sake of our planet earth we have to come up with a better solution to powering our transportation system. The Tesla Model S Battery Powered Electric Vehicle is a much better solution to powering our vehicles and may be the start of a revolution. Will this revolution happen overnight? No. But if we peer into the future and base our vision on the success of Tesla Motors thus far, it’s not hard to be long on TSLA over the long hall. First let’s get a little technical and innumerate some of the ICE disadvantages and briefly explain what has been done to overcome them over many years of development:

    • The ICE is very inefficient at about 20% efficiency. Most of the energy used by the engine goes up in heat. This heat heats up our planet and requires many additions to the engine to dissipate this damaging heat. This requires a water pump, a water cooled engine block, radiator, radiator hoses, radiator fan, fan belts, thermostat and antifreeze.

    • The ICE gets its energy from burning gasoline or diesel fuel. Exploding fuel in the cylinders produces expanding hot gas that produces force. This force comes in non-continuous bursts and thus requires a massive flywheel to store energy and smooth out the torque delivered to the drivetrain.

    • Exploding fuel generates noise that has to be suppressed by an exhaust system that involves exhaust valves, exhaust manifold, exhaust pipe, muffler and tailpipe.

    • Exploding fuel generate polluting exhaust gasses that pollute our atmosphere and have to be partially dealt with by a catalytic converter.

    • Exploding fuel generates expanding hot gas that generates force on the piston. This force causes the piston to move in a straight line confined by the cylinder. This linear motion must be converted into rotary motion. This requires pistons, piston rings, wrist pins, piston rods, rod end bearings and a very complicated crankshaft.

    • As the pistons move up and down they are accelerating and decelerating and constantly changing directions. It’s an amazing feet of engineering that they can do this without tearing themselves to pieces.

    • As the pistons with their rings rub against the cylinder walls, friction results. This friction has to be mitigated by an entire oil lubrication system. This system requires several quarts of oil, an oil reservoir (pan), oil pump, oil filter and many oil channels to transport the oil to all the metal on metal wear points in the entire engine.

    • Valves are required in each cylinder to open to allow fuel to enter, close for compression and power stroke and open for exhaust. These valves require a sophisticated camshaft and valve lifters. The camshaft is driven with a timing chain.

    • A fuel injection system or carburetor is required to inject fuel into the cylinders. Also a fuel pump, fuel filter and a gas tank are required.

    • Along with fuel, air must be supplied to the cylinders to add oxygen for combustion. This requires an air filter and an intake manifold and in some cases a turbo charger.

    • The ignition of the fuel requires an ignition system consisting of a source of high voltage, distributor, spark plug wires and spark plugs.

    • Another huge problem with an ICE is that it does not generate much if any torque at low RPM. This is where torque is very much needed. The ICE needs to run at several hundred RPM to just overcome its own losses. A massive flywheel is needed to smooth out the pulses of force due to the cylinders firing one at a time. The engine must rev up to high RPMS in order to get decent torque.

    • To get the torque needed to get the vehicle moving requires high engine RPM to be traded off for torque by using transmission gears. Today’s automatic transmissions contain hundreds of parts and are very expensive to build and to repair. Transmission fluid is needed to lubricate the many moving parts in the transmission. The transmission has to shift through many gears in order to trade off RPM for torque as the vehicle accelerates from zero to highway speeds.

    • Now if the engine was connected directly to the transmission, and we were stopped at a stop street, the engine would stall because the brakes were on. So some form of “slip” or a clutch for manual transmissions must be added between the engine and the transmission so the engine can keep running while the vehicle is stopped. This gives rise to another part called the torque converter. The torque converter provides the slip needed when the vehicle is stopped and then slips less as RPMS are increased thus transmitting torque from the engine to the transmission with little slip at high RPM. Slip at highway speeds is undesirable giving rise to the lock up torque converter.

    • After the transmission an additional fixed gear reduction is needed between the transmission and the wheels. This is provided by the gears in the differential.

    The Tesla Model S Battery Electric Vehicle (BEV)

    The Battery Electric Vehicle (BEV) does not suffer most all of the above ICE disadvantages in powering a vehicle. Thus it has very good potential to be the preferred power plant of the future. Since I own a Model S and have some experience driving it in hot and cold weather, I will use it as an example of BEV technology at its finest.

    • The biggest advantage of the BEV is that you never have to buy gasoline!

    • Another wonderful advantage of the Tesla Model S is that it is really fun to drive. No one should ever judge this car or the technology if they have never driven one. The thrill of instantaneous torque that throws you back in your seat when you hit the accelerator is hard to describe. Once you experience this you will know what it means to be “torqued”. Remember that electricity flows at the speed of light. This makes the vehicle instantly respond to your command and I mean instantly. Unfortunately, gasoline flows at about 0.0000003 % the speed of light. When you hit the accelerator of an ICE vehicle, fuel can only be supplied at a limited rate which takes time. Then the engine has to develop RPMS, the massive flywheel can only speed up so fast because of its inertia thus more time is required, gears have to shift and after all this the vehicle gradually accelerates. What a difference!

    • The Model S must have something going for it since it received the 2013 World Green Car of the Year, 2013 Motor Trend Car of the Year (where every judge voted it number one), Automobile Magazine’s 2013 Car of the Year, Time Magazine Best 25 Inventions of the Year 2012 Award and Consumer Reports’ top scoring car ever (99 out of 100). It is also rated the safest of all five star safety rated cars by the NHTSA. Also Tesla Motors paid back its Department of Energy loan with interest nine years early! American tax payers actually made money on this loan.

    • No tail pipe emissions is a huge advantage. In the state of Washington where most of the electricity is generated by hydroelectric, the BEV is almost a perfect green solution.

    • The Tesla Model S uses a three phase alternating current, copper rotor induction motor with only three moving parts. They are the rotor and two ball bearings. The rotor does not touch anything except the bearings which have very little friction which is why they are called antifriction bearings. So the engine of the ICE with its hundreds of parts, many of which are metal rubbing on metal, is replaced by a simple non friction electric motor. The motor contains no permanent magnets and is virtually maintenance free.

    • A new formula E car electric motor can have a motor power to weight ratio of 7 watts/gram compared to a Honda Accord V6 of 0.1 watts/gram. This is why the motor of the Model S is only about the size of a watermelon yet develops from 300 to 400 horsepower depending on model!

    • The three phase ac induction motor develops maximum torque at low speeds where it is needed the most. This means that the vehicle does not need any transmission! No shifting of gears. A single approximate 10 to one gear reduction in the differential is used to drive the wheels. Since changing the direction of the motor rotation is a simple matter of reversing two motor wires, the vehicle can be electrically put in reverse without any gear changes.

    • Since the motor speed can be controlled down to zero RPM, no torque converter is needed! When stopped at a stop street or in a traffic jam, the motor does not rotate.

    • Since the motor generates smooth continuous torque, instead of ICE pulsating torque, no flywheel is needed!

    • The electric motor is ideal for regenerative braking. When you let up on the accelerator the motor can bring the vehicle to a stop by acting as a generator thus putting energy back into the battery. This almost totally eliminates the need to use the vehicle’s brakes. During braking, instead of dissipating the vehicle’s kinetic energy by generating heat, heating up the planet and wearing out brake pads, this energy is put back into the battery pack. This feature of the electric vehicle is amazing and is one of my favorite features of the BEV. Brake pads should last forever!

    • In addition to eliminating the transmission, torque converter and flywheel, major subsystems are no longer needed. Eliminated are: the entire internal combustion engine, gasoline, gas tank, fuel injection system, ignition system, alternator, fuel pump, engine oil, oil filter, oil pump, radiator, thermostat, exhaust system including manifold, exhaust pipes, muffler, catalytic converter and tail pipe.

    • The elimination of all of these subsystems makes BEV maintenance much simpler. About the only thing the owner has to do is to refill the windshield washer reservoir.

    • The elimination of the massive engine block in the front of the Model S makes the passengers safer in case of a front end collision. Who wants a massive hunk of steel (the engine block) being pushed into the passenger compartment by a front end collision? A side benefit of not having an engine up front is that it frees up space for an additional trunk in the front (frunk). Also the additional crumple zone in the front in the case of a front end collision is one of the reasons the Tesla Model S has a NHTSA five star safety rating. A personal example of another advantage of the frunk was realized when I picked up 4 family members at the airport each having a big suitcase and back packs. These were stored nicely in the rear trunk. On the way home we stopped at the grocery and purchased a lot of groceries. No problem, we just put them in the frunk.

    • Even though the BEV electric motor is very much more efficient than the ICE (90% vs. 20%) it still generates some heat and needs to be cooled. This is accomplished by a closed loop Heating, Ventilation and Air Conditioning (HVAC) system that controls the temperature of the motor, battery pack and the passenger cabin.

    • Firmware downloads to the Model S’ on board computer make continuous improvements very convenient for both the car owner and the car company. This is a strong incentive for the car company to make improvements that otherwise would require very expensive physical recalls of the vehicle. This has already proven to be very valuable.

    • The Tesla Model S is price and performance competitive to other luxury vehicles such as the Maserati GHIBLI S Q4 400HP V6, 22MPG ICE with 8 speed automatic transmission at a MSRP of about $76,000.

    • Tesla is working on a seven passenger Model X and a more affordable Model E vehicle to be released in the 2015 - 2016 timeframe.

    To be fair, the disadvantages of the Battery Electric Vehicle should be discussed.

    • The BEV requires a battery pack. The Model S battery pack is warrantied for 8 years. Today’s batteries are very expensive; however, a huge amount of research and development is in the pipe line to dramatically reduce battery cost and to store more energy. The 200 to 300 mile range of the Model S is a definite limitation for long distance trips. No problem for most everyday commuting however. There are new battery technologies in the laboratories that can double or triple current battery storage density. So today’s 200 to 300 mile range can be envisioned to become 600 to 900 miles in the not too distant future. The present long distance range problem is being nicely mitigated by Tesla Supercharger stations being strategically located across the US as well as in other parts of the world including China (Te Si La). Presently there are 71 stations in the US and 14 in Europe. By the end of 2014 it is promised that 90% of the US population plus some of Canada will be covered. By the end of 2015 it is promised that 98% of US population and some Canada will be covered. These superchargers are available to Tesla owners that purchased the supercharger option for $2000. One can recharge the battery pack in about a 30 minute pit stop at no further cost for the life of the car.

    • Two Tesla Model S cars have just broken a GUINNESS WORLD RECORD in a cross country drive from LA to N.Y. City in 76 hours using only Tesla supercharger stations.

    • A perceived disadvantage of a Li Ion battery pack is that they can catch on fire. The risk of fire due to an accident is present in any vehicle that carries its own source of energy. The truth is that the Model S battery pack stores the energy of about 2 gallons of gasoline as opposed to the gas tank in a typical ICE vehicle of maybe 20 gallons. The battery pack has a monitoring system to warn the driver and electrical fuses to shut down the system in the case of an accident or overload. I would rather have a system that can be protected by electrical fuses and can warn the driver of a problem as opposed to one that can explode without warning and engulf the passenger cabin in massive flames.

    • This new approach to powering vehicles will require technology transfer. Vehicles still have to be built it’s just that the motor is different. Old jobs will be lost and new ones created. Battery research, development and green manufacturing along with other forms of energy storage technologies have the potential to create a huge number of new American jobs. Also technology for charging batteries from the road surface as the vehicle travels along the highway has great job creating potential. The generation of electricity by alternate green technologies also has huge job creating potential. Progress happens and change is inevitable.

    The demise of the Internal Combustion Engine for powering our vehicles will not happen overnight. However it may just be a matter of time. It may come sooner than later. In the meantime, I am long on TSLA.

    Tom 2/3/2014

  • Report this Comment On February 05, 2014, at 12:18 PM, realitycheck23 wrote:

    Lots of euphoria here. Some possible concerns:

    - If this opportunity is as great as the pumpers claim then you can be sure that others will enter the market, driving down margins. Easiest option for the big carmakers would be to just buy a Tesla and copy it. And then sell 20,000 of them for $29K each.

    - And, if everyone is destined to own a Tesla, won't there be a constraint in the supply of Lithium at some point soon? Maybe Musk will figure out a way to make batteries out of corn husks.

    It will be interesting to see how this one plays out. It's always tempting to take the initial enthusiasm for a new product, based on demand from the early-adopters, and then extrapolate it out to the masses.

    I would be surprised if this stock gets much over $180. Let's see where it is in 6 months, after a few more earnings releases.

  • Report this Comment On February 05, 2014, at 1:14 PM, Baxter13 wrote:

    Wow Tom, your comment is better than 99% of Tesla articles! +1!!

  • Report this Comment On February 05, 2014, at 1:31 PM, Sam026 wrote:

    Wow! I thought I was back in school reading taballas's (Tom's) press release. He did go on.

    Just one more little fact I'd like to add to his diatribe is that the average efficiency of electric production is some where around 40-45% (not counting hydro-electric; damn, those dams are good).

    Yes, electric vehicles give better efficiency and on a fuel to wheel scale it's around 35% to 25% not the 90% to 20% Tom stated. Electricity has to be produced somehow. This is very complex issue and really doesn't lend itself to a one liner in the comment section.

    It seems the electric vehicle zealots like to paint ICE vehicles as evil incarnate and I find that to be in and of itself quite self serving. ICE vehicles have done the job of delivering personal and commercial transportation for the last 100 or so years.

    Has the ICE time ended? Only time will tell. This is a big county with a large variety of transportation needs.

    Are EVs in their new form the better mouse trap? Maybe or maybe not.

    And to the point of the article is Tesla the company that will profit from the change?

    Tune in "for film at eleven" as the TV stations like to say.

  • Report this Comment On February 05, 2014, at 1:50 PM, Hudson2 wrote:

    Reality check- The reason your main concern should not be one is that other car makers are heavily invested in making ICE cars. To totally go the other way would cannibalize their own sales. They cannot make enough EV cars without their own battery factories and these companies will not build a battery factory themselves for a long long time because it is a risky risky move (for anyone but Tesla) Their electric car products just aren't good enough and won't be for a long time. Plus Tesla has patents on its packs. Imagine Chevy builds a battery factory thinking they can sell 500,000/year and only sells 20,000 a year. They will go bankrupt. Other EVs cannot compete with Tesla EVs for at least 5-10 years. By then Tesla will own the EV market.

    As for Lithium production, Elon has made it clear raw materials are not an issue. And that Lithium only makes up 1-2% of the battery anyway.

  • Report this Comment On February 05, 2014, at 3:14 PM, taballas wrote:

    to Hudson2

    Amen. Very good comment. I have read many of Elon's patents. You can tell from them that Tesla is much further up the BEV learning curve than the traditional car makers. I hope he builds the battery factory. What a good source of American jobs and technology. Elon is probably the only one with enough guts to do it.

  • Report this Comment On February 05, 2014, at 4:12 PM, gjsuhr wrote:

    Where is the Model X SUV? It was supposed to debut the end of 2013, now it's the end of 2014.

    Now...I don't really care about the Model X....but the Model E...the affordable Tesla is supposed to follow it. If the X is delayed...when will the E show up.

    As it is, Tesla started selling the $100,000 roadster in 2006. Now, 8 years later, you can get a Model S for $80,000 ($71, 070 base before options) - before government tax credits. That's a nice progression....but it hasn't dropped since the S came fact prices have gone up. So...I have my doubts about Tesla's ability to produce a $35,000 car with equivalent / practical range. They will you say, Elon promised and he has always come through....well...where is the Model X they promised?

  • Report this Comment On February 05, 2014, at 6:14 PM, cmalek wrote:

    Let us not forget the Tucker which also was an evolutionary car. Where is it now?

    I have a naive question. Where and how is the electricity to power all these wonderful Teslas going to be produced? Isn't that taking thousands of small sources of pollution (cars) and concentrating them into few big ones (power plants)? We have a shortage of electricity as it is. The areas whose environment would benefit the most are also the areas that experince rolling brownouts during certain times of the year. Wouldn't adding electric vehicles to the demand turn the brownouts into blackouts?

  • Report this Comment On February 05, 2014, at 6:24 PM, TomIncorporated wrote:


    It's been well-known for quite a while now that Model X deliveries will begin at the end of this year, with major delivery numbers developing in early 2015.

    A concept of the Model E is supposedly being presented at the Detroit Auto Show in Jan 2015.

  • Report this Comment On February 05, 2014, at 8:27 PM, ifool100 wrote:

    Great scoop on Tesla Tom. You're right of course. Unfortunately there is huge momentum for ICU and it won't stop overnight. It's my guess that the majority of naysayers have never driven a Tesla. Many probably never will. It's almost like a different religion or political view. It's a fascinating company.

  • Report this Comment On February 05, 2014, at 9:07 PM, oTeslaManiax wrote:

    I think the decline in ICE vehicle sale will happen sooner than most think. The major auto makers has already blame slow sales on the weather... I think if they did deeper they will find out that a lot of people are delaying their purchase to buy an affordable BEV. A lot of people on internet forums claim they will wait a few more years to get a BEV... lots of my friends who can't afford a model S said they are waiting for the model E... any one who can afford a decent mid-size sedan like a camry or accord are willing to buy a model E based on the few I talked to.... Tesla has already created a huge craving for affordable BEVs over ICE vehicles.

  • Report this Comment On February 06, 2014, at 1:00 AM, Zendwell wrote:

    Go tom, go!

  • Report this Comment On February 06, 2014, at 8:22 AM, XXF wrote:

    How do you justify putting money in with their metrics to market cap being so out of whack? Revenue to market cap, earnings to market cap, heck, even forward projected revenues to market cap. Tesla can be a good company and still not be a good place for you to put your money right now.

  • Report this Comment On February 06, 2014, at 10:18 AM, gjsuhr wrote:

    I see the Tesla drove coast to coast in 76 hrs. If I drove my Honda coast to coast and averaged 55 mph, I could do it in 50 hrs.

    Now...on their web site, Tesla says part of their cost justification is time you don't spend putting gas in your car...and there default value is $50/hr.

    By that reasoning, driving a Tesla across the country costs 26hrs x $50/hr = $1300. (Gas would cost me roughly $350) Of course with 2 people in the car, the Tesla # goes to $2600....but my gas stays at $350. Ouch!

  • Report this Comment On February 06, 2014, at 10:40 AM, ffbj wrote:

    Ev's are just cheaper to operate. Less maintenance equals fewer things to go wrong. One reason I would never buy a hybrid, 2 engines means even more things can go wrong.

    If the average person spends

    3k on gas a year and 1k on powering an electric vehicle per year, then that would be 2k a year

    advantage to the ev. Toss another 500 a year for less maintenance so in 10 years you save 25k, not bad. Ice are on the way out but it will take decades, anyone who says otherwise is just kidding themselves, or misinformed. On the other-side of the question,even Shell says by 2050 85% of all vehicles will be ev's. Currently at only 1% of all vehicles on the road being ev's they have a long way to go.

    Tesla: too rich for my blood at these levels, the drop to 120 was the time to buy them in the recent past.

  • Report this Comment On February 06, 2014, at 10:48 AM, ffbj wrote:

    As far as the grid and the power problems that millions of electric vehicles would cause, well that is in the future. Various studies have indicated that until ev's saturation is around 30% there will not even be a blip in the grid. Mainly since most people charge their ev's at night, when rates are lower in most places, electricity use is way down. Of course the grid is a mess already in many places, aging equipment, non-smart grids. So those problems that already exist and are unrelated to ev's will persist.

  • Report this Comment On February 06, 2014, at 11:25 AM, observerbob2013 wrote:

    Anyone who believes that the internal combustion engine is dead is a fool indeed.

    Apart from anything else there is far too much investment in existing technology and too many opportunities to improve existing engines for a new engine to succeed. Every attempt so far has failed for lack of proven advantage.

    Electricity may seem cheaper than gas until the batteries need replacement.

    Charging may seem ok until the battery is dead and you desperately need to use the car RIGHT NOW (eg the kids call from across town)

    There is a place for a beautiful toy for the rich market to be sure but that is what this is a niche it will never be a Toyota.

    If one really wants an eco-friendly vehicle it is necessary to also look at the production of the electricity from, in most cases, very unfriendly minerals like coal. If you are really green a better source may well be LPG, cheaper and more eco friendly,.

    Tesla is a great company with a great niche product but it will never be worth its current p/e

  • Report this Comment On February 06, 2014, at 12:04 PM, Chontichajim wrote:

    These are 7 reasons why Tesla is a good company without a single reason to buy the stock based on value. I grant that Tesla has moved the market for electric vehicles, but they focus only on the wealthiest consumer.

    The real money will be introducing a practical EV to the middle class and my money would be on Toyota over Tesla.

  • Report this Comment On February 06, 2014, at 4:58 PM, cooter1127 wrote:

    My two cents on Tesla.

    1. Elon Musk may be the genius to end all genius, but typically the market would never put this kind of faith in a CEO who has no prior experience in the industry. As great a coach as Phil Jackson is, I don't think the Yankees are going to offer him a manager position anytime soon. Maybe there are advantages to a firm being run by and industry outsider capable of approaching the industry in radical new ways but I consider this to be a gamble at best and a hindrance at worst.

    2. The development of network of supercharger stations, at best, only puts Tesla on an even playing field with ICE car manufacturers who have a far better developed network of fueling stations across the entire developed world (This advantage in infrastructure also cost ICE auto makers nothing to develop)

    3. I would consider the cost of developing this network a wash against the savings from no advertising budget.

    4. Developing batteries with significantly reduced cost and increased capacity has been the holy grail of engineers since the very first battery was invented. There is a reason fossil fuels are so Improvements to date have been small and inconsequential and tapering to be even less in the future as engineers approach the constraints of the laws of Physics. Why is Tesla so special that people are certain they are going to solve a problem that has eluded the collective efforts of all of the stakeholders of all of the technology firms that would benefit from cheaper higher capacity batteries? And just to go off on a tangent, "Giga Factory" is a nonsense buzzword. Do you think analysts would quote it all the time if Musk just called it a really big battery factory which is what it is.

    5. What does a Tesla model S cost to insure, to repair after an accident, what is the useful life of the vehicle, what does the depreciation rate look like? I would think all of these factors would have long term effects on demand but I have not heard a single metric comparing them to ICE vehicles

    6. You can quote me all of the pro rata earnings figures you want, from an accounting standpoint Tesla has not made a cent of operating income and they are burning through cash like crazy.

    7. 21 billion market cap vs 564 million in equity and I have yet to see a single Tesla on the road where I live (Denver). Maybe they are all over the roads in California, but with that amount of goodwill, I would expect a strong national brand presence. Many of the non car and non stock market people I talk to have never even heard of this car company. Seems like a large premium to pay for minimal brand presence.

    Those would be my 7 reasons not to touch Tesla stock with a 10 foot pole. Maybe I'm wrong but I always seem to lose money when I invest in maybes.

  • Report this Comment On February 07, 2014, at 11:22 AM, PeakOilBill wrote:

    You are correct. Musk is one of the greatest geniuses who has ever lived. Just be aware that millions are jealous of his success, so that ANY malfunction, or freak incident involving the Tesla or its chargers, will receive massive negative publicity. That could hit the stock big time. Some nut could drive into a loaded school bus at 90 mph, puncture the fuel tank and kill a lot of kids, and Tesla will get blamed for the fire! Look at the bad press it got for a fire where nobody was injured after running over a big piece of steel on the road.

    And the giant German and Japanese car manufacturers will eventually begin producing electric vehicles. Hopefully, Tesla will have comfortable lead before they perfect a cheaper product that they can build millions of.

    It will be interesting to see how much longer governments allow cars using oil products as fuel to be sold. Peak oil is a lot closer than most people think. Within a year of global oil output beginning to decline, the price of oil will start to increase very fast. Unless there are many millions of electric vehicles available when that begins, the demand destruction will collapse the financial system which is overloaded with debt. You can't pay off debt in a contracting economy.

    Visit the website 'our finite world' for some interesting articles.

  • Report this Comment On February 07, 2014, at 4:51 PM, shbeavers wrote:

    Currently, lithium batteries are the only ones available that are suitable for the Tesla application. There is only so much lithium available and the quantities required to support millions of electric cars would suck up or exceed the entire raw stock available. The small device market (phones, cameras, tablets, etc) can afford to pay a lot more per ounce for this limited material resource than the huge bulk consumer a much-expanded Tesla could afford. Regardless of how much innovation and quality Tesla the company is capable of achieving, as long as the Tesla vehicle power plant relies on lithium batteries, the company will be resource-constrained to a niche player position in the auto market.

  • Report this Comment On February 10, 2014, at 9:16 AM, Pietrocco wrote:

    The author sees the glass as half full.

    Let`s see the full glass instead:

    1) Mostrly agree, except for the use of adjectives such as "incredibly" and "most visionary". These are exaggerations.

    2) 11 years and 2 models. OK. This is the past, not a guarantee of FUTURE greatness!!

    3) Demand outpaces supply only because supply is so tiny! GM sells more cars in a week that Tesla in a year.

    TMF hypes Tesla so much!!

    It`s a very interesting company, but at 23 billion dollars market cap, a terrible investment!

    Come back in 5, or 10, years and we shall see!!

  • Report this Comment On February 10, 2014, at 1:08 PM, Pfoolhart17 wrote:

    What about free fuel? This has to be an eighth reason unto itself. Tesla owners can commute day-to-day or cross the country and not pay a dime in fuel cost. As the company expands, and owners get a flavor of this, I see it as a major factor in Tesla's continuing success. Drive all you want, the safest and best car on the road--and no fuel cost.


  • Report this Comment On February 10, 2014, at 2:36 PM, dragonmonkey wrote:

    As of today, Tesla is a $24.2B company, Honda is a $65.5B company, and Ford is a $57.4B company. At this valuation, you are basically assuming Telsa will be a bigger brand than Honda and Ford 10 years from now. It is possible, but your odds might be better just playing the lotto.

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David Kretzmann

David started investing in stocks when he was 12 years old and has been a Fool ever since. He is a graduate of Berea College and the Motley Fool's Analyst Development Program, serving as an analyst in Rule Breakers and Supernova. Follow David on Twitter @David_Kretzmann.

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