Tesla Motors Inc. Makes Controversial Announcement and the Boeing Company Is Poised For Another Big Order

Tesla Motors CEO Elon Musk announced today his plans to release Tesla's patent rights. It's a controversial move, but the company could be positioned to thrive even more now.

Jun 12, 2014 at 3:00PM
Longview

Dow Jones Industrial Average (DJINDICES:^DJI) was trading 118 points lower, or 0.7%, by midafternoon after some economic data hit the news feeds. The Commerce Department said consumer spending, excluding autos, rose 0.1% in May from the prior month, significantly less than the expected 0.4%. However, keep in mind that total sales are still up 4.3% from last May, and that a bright spot in automotive sales (up 1.4% from April) isn't a bad thing.

Paul Schatz, chief investment officer at Heritage Capital, offered Reuters his opinion on the market direction: "The market has had a fantastic run and this is just a healthy and routine pause we're in right now. The bull market is old and wrinkly, but nowhere near dead." 

With that in mind, two companies are making major headlines in the markets today.

Inside the Dow, Boeing (NYSE:BA) could be a big winner from a surprise announcement from rival airplane maker Airbus yesterday. Airbus announced that Emirates has canceled an order for 70 of its new A350 wide-body commercial airplane. That order was valued at roughly $16 billion, and now the front-runner to land an equivalent order may be Boeing's new 777X wide-body airplane.

It makes sense, as Emirates is the world's No. 1 customer for the highly popular 777 and has already ordered 150 of the new 777X. Beyond the great news of Boeing's potential to land a multibillion-dollar order for the 777X is the brand image impact that could come along with Emirates canceling its Airbus order.

"Emirates is the largest and most influential long-haul airline in the world," said analyst Sash Tusa of Edison Investment Research in London, according to Bloomberg. "When it looks at your flagship product and decides it can do better with somebody else's, that's a problem."

The 777X, scheduled to enter into service in 2019, will play a large role in the company's revenue and profit going forward. Any word of an agreement for Emirates to buy additional 777X aircraft in the next month or two would be a small positive boost to the aviation manufacturer, which already boasts a backlog of orders valued at $440 billion.

Model S Photo Gallery

Tesla's Model S charging. Source: Tesla Motors

In other huge industrial news, electric-vehicle maker Tesla Motors (NASDAQ:TSLA) made a huge and potentially controversial announcement this morning. Tesla CEO Elon Musk announced his intention to release the company's legal right to its electric-vehicle patents.

Musk's strongly believes Tesla's competition isn't automakers producing electric vehicles to rival his company's own vehicles, but rather mainstream automakers continuing to produce millions of gasoline-powered vehicles. If Tesla releases its patents and enables mainstream automakers to produce better electric vehicles, faster, it could accelerate the adoption of those electric vehicles and thus boost Tesla's overall business potential.

In a blog post, Musk admitted this is a reversal from Tesla's original thinking: "We felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. We couldn't have been more wrong."

This is an interesting development for investors to watch. In the automotive industry a company's success is really defined by two factors: vehicle quality and customer service.

The Model S has been one of the best vehicles ever created and Tesla's focus on customer service has earned a very loyal following and flawless brand image. Musk releasing the company's patent rights could enable mainstream automakers to catch up on the technology side of things; however, as long as Tesla continues to design and produce extremely high-quality vehicles and go the extra mile to take care of customers, the company will continue to thrive -- Elon Musk seems to know this. 

Warren Buffett's worst auto-nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

Daniel Miller has no position in any stocks mentioned. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers