Tesla Motors, Inc. Investors Shouldn't Fear Fuel Cell Technology

Hydrogen fuel cell technology is making groundbreaking progress. But Tesla investors shouldn't worry.

May 18, 2014 at 2:26PM

Hydrogen fuel cell technology is groundbreaking. It will undoubtedly have an impact on the future of automobiles. But does this mean that Tesla Motors (NASDAQ:TSLA) is doomed? Not at all. Fortunately, hydrogen fuel cell vehicles and fully electric vehicles are not mutually exclusive -- there's room for both technologies to happily coexist.

Sure, hydrogen fuel cell vehicles certainly pose a threat to Tesla by potentially stealing from the company's addressable market in the next 10 to 15 years. But Tesla is not priced to take over the entire vehicle market. In fact, even if it took 15 years for Tesla to achieve 4% of the global vehicle market, investors who buy the stock at today's stock price would likely still achieve meaningful returns.

And Tesla's vehicles are about far more than their green qualities. Electric vehicles, when they are built the Tesla way, are simply great vehicles. A handful of accolades and a 99 out of 100 rating at Consumer Reports by both the Consumer Reports judges and owners can attest to that. Not to mention the Model S was the top selling vehicle in North America among comparably priced cars in 2013. Going electric isn't just about going green -- Tesla simply makes cars consumers want to buy.

Battery technology isn't going anywhere -- and it will only get better. In the same way batteries have advantages in making typical consumer electronics -- like tablets and smartphones -- easy to use and consumer friendly, they can do the same thing for cars. And just like hydrogen fuel cell technology, battery technology will likely make unprecedented progress in the decades to come.

In the video below Daniel talks about why long-term Tesla investors can be fans of hydrogen fuel cell technology while still being confident in Tesla's future.

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Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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