Tesla Motors, Inc. Faces New and Recurring Headaches in China

Tesla Motors has much potential in the world's largest automotive market, but it also faces many hurdles and headaches in China, as well.

Jul 8, 2014 at 3:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) has lost more than 100 points near the end of today's trading session as second-quarter earnings season approaches. According to Reuters, roughly 60% of stocks trading on the NYSE have dropped, and nearly 75% of Nasdaq-listed companies are down.

Despite the market's treading water early this week, investors should keep in mind that the Dow recently broke through 17,000 for the first time ever and that economic data is expected to show stronger growth in the second quarter. So long as consistent growth is expected and achieved, the stock market remains the best option for long-term investors.

With that in mind, here are a couple of headlines in the automotive industry today.

Tesla Motors (NASDAQ:TSLA) is receiving a crash course in how difficult doing business in China can be. Tesla believed its trademark infringement conflict with Chinese businessman Zhan Baosheng had been resolved, removing one barrier of entry to the world's largest automotive market.

Apparently, that's not the case, and Zhan is taking the Palo Alto-based automaker to court and demanding the company stop all sales and marketing activities, as well as pay him $3.9 million in compensation.

This is just the latest in a long list of trademark problems foreign companies have faced in China. Even Apple paid $60 million for the rights to use the iPad trademark in China, though that amount is laughable for the iPhone maker. Likewise, Tesla can easily afford the $3.9 million demanded by Zhan, but the situation underlines a bigger problem: the difficulty of doing business in China. This will prove a constant threat as Tesla ramps up deliveries in what it expects will be its largest market for Model S deliveries as soon as next year.


Tesla charging station. Source: Tesla Motors

In other China-related news, Beijing is reportedly planning to install as many as 10,000 public charging stations by 2017, according to Chinese news service Caixin Online. Unfortunately for those Tesla investors hoping this could be the start of a collaboration to build out Tesla supercharger infrastructure, it isn't: Those public charging stations aren't reported to be compatible with Tesla vehicles. That's more than frustrating, especially considering that Tesla just released  its patents in an attempt to avoid scenarios like this.

In broader automotive-industry news, automakers have recalled more vehicles in the United States than in any other year on record -- with six months remaining on the calendar. The National Highway Traffic Safety Administration has tallied roughly 37.5 million vehicles recalled this year, which has already crushed the previous record of 30.8 million set in 2004. 

It's been a downward spiral for the industry in terms of recalls, which General Motors (NYSE:GM) kicked off this year with a tragic ignition-switch recall that revealed remarkable corporate ignorance starting as long as a decade ago. On top of that, Japanese automakers have been dealing with faulty air-bag problems from a supplier, Takata Corp.

Despite the recalls, the U.S. auto industry is continuing its sales rebound and recently posted two of the best months, in terms of seasonally adjusted annual rate of vehicles sold, since the recession wrecked vehicle sales roughly six years ago. 

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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information