Tesla Motors, Inc. Stock Continues Its Climb -- Here's What You Need to Know

Here are the key drivers giving the Street greater confidence in Tesla stock.

Jun 17, 2014 at 8:08PM

Tesla (NASDAQ:TSLA) stock ended the day with another nice gain, adding a 3% increase on top of its massive 9% boost yesterday. What's driving the stock price? Broadly, an increasingly realistic best-case scenario of meaningful EV adoption in the coming years. More specifically, the market has incremental confidence in Tesla, thanks to these three drivers that made headlines this week.

Tesla Logo

Image source: Tesla Motors.

Simplifying charging infrastructure
Following news that Tesla would allow peers to utilize any of its patents as long as they did so "in good faith," Financial Times reported that Tesla was in talks with Nissan and BMW about a new level of collaboration on charging networks. FT asserts its sources on the story come from all three companies.

With the three largest manufacturers of electric vehicles considering greater commonality in charging infrastructure, the collaboration could lead to more rapid development of a useful charging network. Given the small amount of capital required to building charging stations, a new level of collaboration could help the EV sector swiftly address consumer range anxiety about driving EVs long distances.

Finalizing the Model X
Tesla surprised Model X reservation holders on Monday when it said it would begin production on the upcoming fully electric SUVs in "early 2015," as opposed to recent statements from the company that aimed for production not to ramp up until the "spring of 2015."

Model X

Image source: Tesla Motors.

The news was just as much a surprise for Tesla shareholders. The X is looking to be another hot-selling vehicle for the company; the sooner it goes into production, the better. After taking reservations on the Model X, Musk is confident enough in the vehicle to predict that demand for the X could be greater than that for the S, which was the best-selling vehicle among comparably priced cars in North America in 2013.


Image source: Tesla Motors.

Potential for solar translates to potential for Tesla
Today, solar energy system company SolarCity (NASDAQ:SCTY), where Elon Musk holds the chairman position, announced a deal to acquire Silevo, a manufacturer of PV panels. Along with the announcement of the deal, a SolarCity blog post by Musk, co-founder and chief technology officer Peter Rive, and co-founder and CEO Lyndon Rive detailed a plan to build a manufacturing plant for PV panels that will bring "massive economies of scale to achieve a breakthrough in the cost of solar power."

The announcement gave investors greater confidence in the future of solar power, sending SolarCity shares skyrocketing 17.5%. Musk said on Twitter that the goal for the new plant is to make unsubsidized solar power cost less than grid electricity from coal or fracked gas. For Tesla investors, the imminent affordability of solar power, which could lead to lower-cost electricity and a greener grid over the long haul, strengthens the case for electric vehicles.

All together, these factors strengthen the case for Tesla's short- and long-term success. Stealing big and lucrative market share from the approximately 80-million plusgas-powered vehicles sold globally on an annual basis is looking increasingly realistic.

This technology revolution could be bigger than electric vehicles
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 Sparks owns shares of Tesla Motors. The Motley Fool recommends SolarCity and Tesla Motors. The Motley Fool owns shares of SolarCity and 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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