Vroom! Vroom! Tesla Revs Up

Things are not looking good for Tesla Motors (Nasdaq: TSLA  ) .

The company that jumpstarted the electric-car revolution reported grim earnings last night. Its revenue rose only 4% in fiscal 2010, while its net loss nearly tripled to $154.3 million.

Operationally, the company behind the uber-sexy Roadster has taken a pit stop while it works up a 2.0 version called the "Model S." Meanwhile, the competition is running laps around Tesla. General Motors' (NYSE: GM  ) Volt and Nissan's Leaf both hit the market late last year. Ford (NYSE: F  ) is expected to have an Electric Focus out before this year's done. Meanwhile, new rivals from Honda (NYSE: HMC  ) to Th!nk to Mitsubishi to Berkshire Hathaway (NYSE: BRK-B  ) holding BYD all have new electric car models poised to compete directly with Tesla in the coming years.

So why is the stock up 8% this afternoon? Like the electric car industry in general, Tesla is all about the future.

Expect great things
Consider: At a price tag well into the six figures, Tesla has managed to sell only 1,500 Roadsters to date, representing roughly $150 million in sales. But already -- without a car on the road to advertise it -- Tesla has accumulated more than 3,700 "reservations" to preorder its new Model S, which amounts to more than $185 million, sight unseen.

Far from being out of the fight before it's begun, Tesla is only getting started. It's begun amassing allies; Toyota (NYSE: TM  ) and Panasonic (NYSE: PC  ) both have taken equity stakes. It's bought itself a factory. It's diversifying its revenue streams by helping Toyota build an electric RAV4. And thanks to the lower sticker price on the Model S, the company's got a very hot seller on its hands already.

Granted, none of this addresses the question of the stock price. Even if we assume that Tesla can build all the cars it's got reservations for, in Year One, and then repeat that feat in ensuing years, the company's $2.2 billion market cap gives this stock a price-to-sales ratio of more than 12. (By way of comparison, both Ford and GM sell for 0.4 times sales.)

Then again, if you're shopping for a Tesla car, or Tesla's stock, perhaps price is no object.

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Berkshire Hathaway and General Motors are Motley Fool Inside Value selections. Berkshire Hathaway and Ford Motor are Motley Fool Stock Advisor picks. The Fool owns shares of Berkshire Hathaway.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy. Try any of our Foolish newsletter services free for 30 days. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


Read/Post Comments (2) | Recommend This Article (6)

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  • Report this Comment On February 16, 2011, at 9:27 PM, Varchild2008 wrote:

    Are you kidding me?

    TSLA share price should have reached

    $1,000 a share by now!!!

    Momentum Baby!

    /sarcastic comment from a (F) investor

  • Report this Comment On February 17, 2011, at 1:09 PM, DaveSRQ wrote:

    Cute article, but here are the facts: 1. Who has been selling street legal plug-ins for 3 years? - Tesla. 2. Who has a (non-hybrid) plugin rated for more than 200 miles per charge? - Tesla.

    The Chevy Volt is a hybrid, which will be a maintenance headache, due to the complex systems onboard. Less than 200 Volts and Leafs (combined) are on the road right now. This time next year, we'll see if Ford joins the party, or if it's just talk. However, Tesla's model S has alpha prototypes on the road, and test drive cars will be available this fall. They are taking about 600 Model S reservations (with $5,000 deposit) each month, and that pace is increasing. They will have more than 10,000 reservations by year end. The Model S will be the only plug-in on the market to offer battery size options, with a 300 mile max range and a 10 year useful battery life.

    Get your stock now while it's cheap!

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