What Is Tesla's Greatest Threat?

For a disruptive, young company like Tesla Motors (NASDAQ: TSLA  ) , it's especially important for investors to take a close look at not only strengths and opportunities, but also weaknesses and threats. That's why Fool contributor Daniel Sparks and industrials bureau chief Blake Bos took a close look at Tesla stock by using a SWOT analysis in the video below. In this particular segment of the video, Daniel and Blake look at Tesla's biggest threat: public perception.

Marketed as a zero-emission vehicle, the company's brand benefits from the perception that the Model S is green. As Daniel explains, any damage to this perception, or any significantly greener alternative, could pose a problem for the company. The reactions to three battery fires that resulted from high-speed collisions toward the end of 2013 illustrate just how important brand perception is to the automaker.

Check out the video below to learn more about Tesla's greatest threat.

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Read/Post Comments (16) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On February 11, 2014, at 9:23 AM, ckgod wrote:

    What perception? It IS green. Stop listen to the anti-EV wing nuts will you?

  • Report this Comment On February 11, 2014, at 10:08 AM, Jim5437532 wrote:

    Tesla is its own biggest threat. By not taking safety seriously, Tesla is putting itself in a position of high liability.

    The Tesla model S. still has defects that make it a fire hazard. Tesla charger connections are still overheating, melting and burning. Tesla batteries are poorly located and poorly protected. Tesla is Junk.

    On 1/9/2014 Elon Musk said that replacement adapters that are part of the recall would be mailed out within two weeks. A month later Tesla customers have still not received the replacement adapters that are part of the Tesla model S. recall.

    Several people have been injured by faulty Tesla charge connectors. Tesla is big on making promises and hype, but short on delivery. Tesla needs to start making safety a top priority. Tesla needs to stop playing blame games and games with semantics. Tesla needs to stop lying. Tesla needs to be proactive instead of reactive. Tesla is being a follower of technology, rather than a leader. Tesla is a greedy corporation that has a disregard for safety. The Tesla model S. is an E-Pinto.

  • Report this Comment On February 11, 2014, at 10:30 AM, Frtzr wrote:

    And how about a little reality check on Tesla and the battery situation? Here is Peter M. De Lorenzo's industry insider's take from his "The Autoextremist" column October 29, 2013:

    "And then we have Tesla, you know, the “new” car company that is the darling of the Green Intelligentsia and the movers and shakers on Wall Street who should know better. Tesla is suffering through another PR disaster due to a fire that broke out resulting from a crash of one of its vaunted Model S cars. It’s no big deal according to Tesla and to the rabid horde of Elon Musk acolytes, but this just in: It is. Boy, is it ever.

    Why? Well, after doing this website for fourteen years I’ve gotten to know people, well-placed executives throughout the industry who know of what they speak about and who divulge things to me only when the time is appropriate.

    And this is one of those times.

    What I’ve found out about the Tesla is this: There is a reason for fires upon impact with the Model S and it has nothing to do with the batteries themselves but how the batteries are – or are not, as the case may be - protected in the vehicle.

    We all know Elon is a genius and that Tesla is the miracle of the new automotive world, but the fact remains that the miracle workers at Tesla skipped a step. It’s something that GM – you know, that tired old rust-belt auto company from a bygone era – learned while developing the Volt. The GM engineering team zeroed in on a critical area of concern with the Volt’s batteries when it came to protecting them upon impact, something like, “Gee, if someone were to really crash one of these things there could be a problem with the batteries, so, we better do something about it.” So the GM development team triple-wrapped the Volt battery pack to reduce the chance of “piercing” during accidents.

    And guess what? The “piercing” of the batteries is exactly what caused the two post-crash fires in the Model S. Why? The Tesla development team chose to single-wrap the Tesla batteries, thus leaving the batteries less protected and more exposed during incidents, which is a giant heaping, steaming bowl of Not Good, when it comes right down to it."

    http://www.autoextremist.com/current/2013/10/29/a-bad-week-f...

  • Report this Comment On February 11, 2014, at 10:30 AM, highgrowthcarson wrote:

    JIm -- what cool-aid are you drinking? no deaths, no serious injuries -- model s is by far safest car ever made. which is, perhaps, its single biggest selling point amongst the rich and famous who take safety pretty seriously. Please. Get your facts straight before you make comments.

  • Report this Comment On February 11, 2014, at 10:42 AM, MiserblOF wrote:

    The technological advances made in gasoline tanks in vehicles are truly amazing, but even so, comparing the danger of being incinerated in a collision in a gasoline powered vehicle with the fires that have happened in THREE Teslas is ridiculous.

    There are compelling reasons to believe that these are indeed the safest cars every made. ePinto? Please.

  • Report this Comment On February 11, 2014, at 11:17 AM, AdvanderMeer wrote:

    So what is the greatest threath to the planet earth? There could a big comet on collision course that we don't know about yet! Really? Yes really! Let's all crawl into a cave to protect ourselves!

    That was 2.5 minutes of my life I'll never get back.

  • Report this Comment On February 11, 2014, at 11:39 AM, damilkman wrote:

    I have mentioned this in the past but the biggest threat is not the battery pack being breached but the technology moat being breached. Someone patents a better cheaper battery and your advantage is gone. Technology advances often advanced in leaps and bounds and is certainly not always incremental.

  • Report this Comment On February 11, 2014, at 12:28 PM, englup01 wrote:

    There is only one clear threat to Tesla success. That is a possible crash in oil/gasoline prices. With the USA now energy independent this threat is not so outlandish. With the Supercharger networks becoming a reality globally Tesla is setting the stage for domination of the luxury car market and then the midsize economy car market within 10 years.

  • Report this Comment On February 11, 2014, at 1:11 PM, NumbnutsInvestor wrote:

    According to Jim5437532, several people have been injured by faulty Tesla charge connectors. Where are you getting your sources from?

    When doing a Google search on those exact terms, you get hits from this 'Jim' person cross posting on other forums. This guy is anti-Tesla, as seen through most of his posts Fool.com and other sites as well. Just ignore this guy. He has nothing to contribute and is probably getting paid to bash Tesla.

  • Report this Comment On February 11, 2014, at 3:37 PM, lbjack wrote:

    Because stock valuation is based on anticipation -- where investors think it's going -- the further away from current performance -- measured, for example, by P/E -- a stock's price is, the greater the rubber band effect will be. So, something which in another universe might be considered trivial -- like a minuscule number of cars catching fire from external factors, with no injuries, and which the NHTSA declined to investigate until importuned by Tesla -- become way overblown because someone yelled "Fire!" (no pun intended) and started the panic that led to TSLA's precipitous drop, not so much because of the fires themselves as market players trying to second-guess each other.

    As for the discourse on "green-greener" -- and though the commentator who owns Tesla stock is trying to be objective -- that's familiar Tesla-basher rubbish. Of course the bashers -- or should I say the shorts? -- discount tail-pipe emissions (since there are none from a Tesla) and go up the supplier food chain to say "Aha!" Until a car made of cellulose comes along, even if a car itself leaves no carbon footprint, the manufacturer and vendors will use materials and processes that do. So that argument is pure sophistry.

  • Report this Comment On February 11, 2014, at 3:53 PM, FoolInStocks wrote:

    @Frtzr quotes, Autoextremist who wants us to believe the Volt was designed better ... And yet

    (LA Times Jan 2012).

    "General Motors Co. is making modifications to the Volt because of a series of fires after test crashes of the plug-in hybrid vehicle. The fires were caused by a coolant leak that occurred when the car's battery pack was punctured during severe side test crashes by NHTSA.

    The fires occurred hours to weeks after the tests as the coolant leaked and eventually created a short circuit."

    Batteries pose a different, but IMO lower, risk of combustion than a ICE vehicle, but let's not kid ourselves that Tesla don't take safety at least as seriously as every other manufacturer. And the safety rating it achieved rather reinforces that for the 'typical' crash situations it test.

    If you are short on TSLA, good luck (again) - I suspect it's not dropping back as far as you hope!

  • Report this Comment On February 11, 2014, at 6:14 PM, oTeslaManiax wrote:

    Elon said he will release a white paper to show how green the model S from production energy cost to use. According to him, the model S only needs 10, 000 miles of use to pay back its production energy cost.

  • Report this Comment On February 11, 2014, at 7:12 PM, Capt601 wrote:

    easily the biggest threat to Tesla is the dealers and their unionistic NADA.

    Tesla is a big threat to their lifestyle and scamming of consumers for years. They add nothing to the cycle of auto buying. just a cost, and they are afraid other companies will do the same. what other industry forces the manufacturer to sell through a franchisee? imagine if Apple could not open their own stores?

    Look at how the dealers are fighting the sales of Teslas in most states. consumers are outraged over this treatment by the dealers, but they sneak legislation in with the NADA lobbyist. and say they are the best for consumers. meanwhile dealers are some of the least trusted individuals.

    dealers cannot sell a tesla without stating every negative thing about an ICE car. every benefit of a Tesla completely puts down an ICE car. meanwhile they have hundreds of ICE cars sitting on their lot. what do you think they want to sell?

    also, service is where dealers make their money. and with an EV, very little service needed. now the dealers cant sell you an unneeded fluid change, spark plug change, gasket change, oil change, etc... how will they make their money? they wont, so they are fighting it.

    lastly, Tesla does over the air updates for cars that actually improve the product after you buy it. and it all happens right in your garage. why would other cars not do this? dealers, once again. why not? guess what you do now with your GM or toyota product for an update? you have to schedule time to take your car to the dealers service center, and guess what they now have? your car. and now can push unneeded service on you because your car is now in their hands. of course GM and toyota, etc.. could push over the air updates, but that doesnt agree with their dealer network.

    Dealers are worried about a few things besides selelin

  • Report this Comment On February 11, 2014, at 9:19 PM, oTeslaManiax wrote:

    @Capt601

    I think you highlighted some key advantages that Tesla has over other auto makers and ICE even disregarding the BEV green advantage. Other auto makers already have single digit margin and has to split the margin with the dealers. The only way they can make more money is by parts and repairs which they also have to split with the dealers. This alone gives Tesla a very strong margin advantage. After the giga battery is built Tesla's margin will go even higher. The other auto makers will have a hard time to catch up on margins alone on top of just technology. I anticipate them dropping price further on ICE vehicles to make a sale vs BEV in the next few years. That will further shave off more margin. All in the meantime trying to enter the BEV market by pricing their vehicles at a loss and trying to shake loose of their dealer network. They will have an uphill battle with heavy baggage. Some might even go back into bankruptcy. The threat is not on Tesla but the other auto makers !

  • Report this Comment On February 14, 2014, at 12:49 PM, stainlesssteel77 wrote:

    Jim/Jim5437532 appears to be a desperate short, shotgun blasting anti-Tesla FUD.

    As of 14Feb2014 9:07am, Googling "Tesla is junk" with time range "past week" gives at least fifteen articles with the same cut-n-paste FUD comments containing this phrase.

    News for "Tesla is junk"

    A Tesla Test Drive: Does the Model S Live Up to the Hype? - The Motley Fool

    http://www.fool.com/investing/general/2014/02/14/a-tesla-tes...

    What Is Tesla's Greatest Threat? (TSLA) - The Motley Fool

    http://www.fool.com/investing/general/2014/02/11/what-is-tes...

    Tesla Ousts Mercedes as Consumer Reports Crowns EV the King of - Brandchannel

    http://www.brandchannel.com/home/post/2014/02/10/140210-Tesl...

    Report: Tesla Model X to come only in AWD - egmCarTech

    http://www.egmcartech.com/2014/02/10/report-tesla-model-x-to...

    Would you sell your Tesla Model S for a profit? Electric superstar ... ecomento.com

    http://ecomento.com/2014/02/11/sell-tesla-model-s-profit-ele...

    Gut check time for Tesla shareholders - Torque News

    http://www.torquenews.com/1083/gut-check-time-tesla-sharehol...

    It's Electric! Tesla Stock Soars to All-Time High - ABC News ("Tesla is junk" deleted but response still there)

    http://abcnews.go.com/blogs/business/2014/02/its-electric-te...

    Tesla Motors Inc (TSLA) Model X Pre-Orders Tally Rising Sharply - Valuewalk ("Tesla is junk" deleted but response still there)

    http://www.valuewalk.com/2014/02/tesla-motors-inc-tsla-model...

    Tesla Stock Surges On China Subsidies - ValueWalk

    http://www.valuewalk.com/2014/02/tesla-motors-inc-tsla-model...

    Tesla faces ban on new stores in Washington state - GeekWire

    http://www.geekwire.com/2014/proposed-law-block-new-tesla-st...

    A Tesla Test Drive: Does the Model S Live Up to the Hype? (TSLA)

    http://www.fool.com/investing/general/2014/02/14/a-tesla-tes...

    Tesla Motors: More Burning Questions - Stocks To Watch - Barrons ...

    http://blogs.barrons.com/stockstowatchtoday/2014/02/14/tesla...

    T-Mobile named among most innovative companies of 2014 ... tmonews

    http://www.tmonews.com/2014/02/t-mobile-named-among-most-inn...

    For executives, Twitter is a chance to serve the brand and show their ...Automotive News

    http://www.autonews.com/article/20140210/OEM02/302109978/for...

    Morning Buzz: Tesla Motors Inc (NASDAQ:TSLA), Campbell Soup ...marketnewscall.com/

    http://www.marketnewscall.com/morning-buzz-tesla-motors-inc-...

    Tesla Motors Inc (NASDAQ:TSLA) Gained 5.94%; TSLA Stock ...fxnewsrecall

    http://www.fxnewscall.com/tesla-motors-inc-nasdaqtsla-gained...

  • Report this Comment On August 26, 2014, at 4:15 PM, jamessmith789 wrote:

    Mitsubishi Motors and short warranties on their Models so they tried to extend it .

    http://stocknewsdesk.com/tesla-decided-extend-warranties-mod...

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