Predicting the future for any company is never an exact science, but when it comes to Tesla (NASDAQ:TSLA) it's almost an exercise in futility. After all, the carmaker is known for overpromising and underperforming. It's also operating in a market that's seeing increased competition, threatening its leadership position. 

Nonetheless, Tesla could remain the leader in what may be a bigger market in five years, granted it's able to execute. In order to do that, it needs robust demand, international expansion, and diversification into other markets. It also needs CEO Elon Musk to perform. A tall order, but one that, judging from its recent moves, is possible. 

Tesla has the leadership role for now 

Tesla vehicle.

Image source: Tesla

Tesla is by far the leader in the electric vehicle market today. The company and its celebrity CEO Musk are household names. It has a huge following of supporters and an equal amount of critics. Investing in Tesla requires resolve given the volatile nature of its performance and its stock price. Earlier in 2019, it was dealing with losses, and come spring, it has a surprise profit. 

While the electric vehicle market is tiny today, it's expected to explode in the coming years. According to Allied Market Research, the electric vehicle market was valued at around $118 billion in 2017 and is forecast to grow to $567 billion by 2025, representing a CAGR of 22.3% from 2018 to 2025.

Tesla has the potential to maintain its leadership position in that growing market as environmentally conscious consumers and those seeking more technology in their vehicles are drawn to the company. The latter is expected to drive much of the demand for Tesla in the near term. New features like Smart Summon are generating a lot of buzz. The feature enables customers to summon their car from a parking spot or driveway without a driver behind the wheel. Since its launch in September, it's been used more than one million times. 

Tesla was here first 

Tesla has the first-mover advantage as well, but that doesn't mean its leadership won't be tested. A lot of vehicle manufacturers, including Ford (NYSE:F) and BMW, are getting into the market. Assuming Tesla can keep growing sales, the car company will be in a good position to succeed as a stock. 

Also boosting Tesla's prospects is its international expansion. Selling its cars in as many countries as possible is critical to the company's future success. It already has manufacturing facilities in the U.S. and Shanghai. Musk announced this week that the fourth Gigafactory will be located in Berlin. By positioning manufacturing in these regions, Tesla can more easily serve international customers. 

China is an important market for the carmaker given the large pool of consumers it can tap. The company plans to build 3,000 Model 3 cars per week at the factory that just rolled the first models off the line. If these cars are popular in China, it could help Tesla maintain a global leadership position in the electric vehicle market. 

But Tesla has to execute on the manufacturing front to make this all possible. Any snafus, like the ones that plagued the Model 3, could be its death knell. The last thing Tesla needs is to burn through cash trying to fix production problems. It ended the third quarter with $5.3 billion in cash. 

Tesla is also continuing to innovate with its vehicles, including an electric truck that it plans to unveil on November 21. Musk has been teasing the truck for months now but is keeping the look under wraps for maximum impact. He described it as something out of Blade Runner. Pricing is expected to be around $49,000, undercutting its rival Rivian, which is rolling out two electric trucks starting at $61,000. 

Energy could be the next bastion of growth 

Beyond electric vehicles, Tesla has an opportunity to diversify the business into the energy market, which could boost shares if it becomes something meaningful. With climate change reaching crisis levels and now a top concern for millions of people, demand for alternative energy sources is only expected to grow. If Tesla can deliver products that meet that need, it could be a huge opportunity. Musk said as much when reporting third-quarter earnings. He predicted Tesla's energy business will be big or bigger than its car operations. 

How successful Tesla will ultimately be is up in the air. Its solar roof tiles, which it just launched a new iteration of, haven't taken off with consumers yet, but there are promising signs that the business is finding its footing. It reported that energy storage deployment hit 477 MWh in the third quarter, an all-time high for the company. During the quarter, it deployed 43 MW of solar, which is 48% more than in the second quarter. Keep in mind that two years ago it deployed more than 160 MW of solar.  

Investors in Tesla have had a rocky ride over the years, but it seems to be firing on all cylinders these days. It got its production up and running in China, its gross margins increased even as the price of the Model 3 comes down, and it's about to launch a new truck.

If Tesla can stay the course, it's poised for more growth over the next five years.