3 Reasons to Love Tesla Motors This Week

Tesla Motors has been spinning its wheels lately, but three catalysts from this week could propel the stock going forward.

Jun 6, 2014 at 3:15PM

Tesla Motors (NASDAQ:TSLA) has lost some of its momentum recently, with shares falling more than 5% in the past month. This week, however, at Tesla's annual shareholder day in California, the electric-car maker gave investors compelling insight into the future of its business. There was also some encouraging news out of New Jersey that could enable Tesla Motors to again sell its cars in the state. Here are three developments every Tesla enthusiast needs to know from this past week.

Model X

Source: Tesla Motors, Model X

The Model X will exceed your expectations
It's no secret that Tesla has delayed production of its much-anticipated Model X vehicle more than a few times now. However, at Tesla's shareholder event, Elon Musk reassured onlookers that the all-electric crossover is well worth the wait. Specifically he said, "At Tesla whenever we show off a car as a demonstration item, the actual production car will always be better than what people saw."

Musk went on to say that the delays were necessary to get the Model X to the point where it will "completely blow people away." It's certainly refreshing to see an auto company that cares more about delivering the best product possible rather than rushing mediocre products to market. If the Model X does, in fact, exceed our expectations it could be a boon for Tesla's stock. Musk said he expects to reach volume production of the Model X in the second quarter of next year.

A controversial announcement is on the horizon
Musk surprised investors during the shareholder event this week by saying that he was planning on doing something significant in relation to accelerating mass adoption of electric cars, not only in regards to Tesla, but concerning traditional automakers as well. He went on to say that this move would be somewhat "controversial in respect to Tesla's patents."

Typically in business, it's not a good thing when a CEO tells shareholders to expect a controversial announcement. However, in Tesla's case, "controversy" often translates into opportunity. Tesla's direct sales model, for example, is one of the most controversial issues to hit the auto industry in decades. Yet, it is also revolutionizing the way consumers shop for cars and improving the customer experience in the process.


Source: The Motley Fool.

The company's plan for a Gigafactory was also somewhat controversial when first announced. But, if executed properly, the massive battery factory would reduce the per-kilowatt-hour cost of battery packs by more than 30%. Any guess as to what Musk's next "controversial" plan might entail would be pure speculation at this point. However, given Tesla's track record any so-called controversy is likely to be a catalyst for the company.

New Jersey gives Tesla a second chance
It looks as though Tesla will be able to resume business in the Garden State; the state legislature approved a bill this week that would allow the electric-vehicle maker to sell its cars directly to consumers. Tesla was forced to stop selling its cars in New Jersey on April 1, after the state's Motor Vehicle Commission passed a rule banning direct auto sales.

The bill allows Tesla to operate four retail stores in the state (that's two more than it previously had). Additionally, Tesla will be required to operate at least one service center in New Jersey.

While New Jersey is a relatively small market, the repeal of its banishment could be an example to other states that oppose Tesla's direct sales model. As it stands, Texas and Arizona currently ban Tesla from selling cars in their states, while other states -- including Maryland, Virginia, and Colorado -- have restrictions in place.

Foolish takeaway
Overall, it was a good week for Tesla Motors and its shareholders. The stock was moving higher in mid-day trading on Friday, with shares priced around $207 apiece. Looking ahead, Tesla's stock performance will largely depend on how well the company executes on its promises: Think Model X and Gigafactory.

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Tamara Rutter 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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