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I don't like to do it, but I am willing to admit when my investment thesis about a company is wrong. Lately, the thesis I've been reconsidering is that of Tesla Motors (Nasdaq: TSLA ) . More than a month ago, I said delays, competition, and an absurd valuation could derail Tesla's stock over the next few years. But later when I wrote about disruptive technologies, Tesla was on the top of my list. And just last week I thought Elon Musk had the vision I like to see in a CEO (although plenty of people thought Musk leaves something to be desired). So maybe I was wrong.
I still don't like that Tesla is losing money or the inevitable delays we will see in the Model S launch, but there are some qualities I find endearing about Tesla.
- Tesla has technology that's the envy of everyone from Toyota (NYSE: TM ) to Panasonic (who both invested in the company).
- The Roadster and Model S both offer better range than most electric cars.
- At a time when some electric cars have uninspired designs, Tesla's vehicles ooze sex appeal.
As much as I like Tesla's vehicles, the option of being a supplier gives Tesla the upside I like to see. After seeing details of the Ford (NYSE: F ) Focus and its limited 100-mile range, bigger manufacturers may come knocking for parts if their EVs flop. Tesla can also offer a more complete vehicle solution to manufacturers than A123 Systems (Nasdaq: AONE ) , which focuses on batteries and is distracted by trying to diversify the battery market.
But I am having trouble answering the question "who is Tesla?" Is it a car manufacturer? Is it a parts supplier for other auto manufacturers like it is doing with Toyota's Rav4? Is it a technology licensing company? Maybe it's some combination of all of the above? If it is some sort of electric car conglomerate, can that model really survive or is a buyout by Toyota or some other manufacturer inevitable?
Maybe all of those options and a still-developing business model are giving Elon Musk the flexibility to build Tesla into an automotive powerhouse. After all, finding the next disruptive technology requires a little faith in the company you are investing in.
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