Today is an important day for electric carmaker Tesla Motors
Why the Model S matters
Tesla CEO Elon Musk spent the last three years building up our expectations of the all-electric car's performance capabilities. But can the Model S live up to the hype? Analysts at Goldman Sachs
Though the Roadster was the company's first all-electric sports car, the new seven-passenger S series is the first car Tesla will have designed and manufactured 100% in-house. This is no small feat for a company such as Tesla, which doesn't benefit from the economies of scale afforded to traditional automakers.
According to management, the Model S offers a driving experience unrivaled by not only other electric vehicles but also similarly priced gas-guzzlers. At a base price of $49,900 after federal tax credits, the car isn't cheap. Of course, neither is the performance at zero to 60 mph in 4.4 seconds, and with a top speed of 125 mph, you can leave other electric cars in the dust.
For comparison, the 2012 electric Ford
Production enters overdrive
The next thing investors need to keep an eye on is whether Tesla can start rolling cars off the assembly line at a faster and more efficient pace. If the company can achieve its goal of 20,000 Model S deliveries by next year, then Musk just may accomplish his grand plan of making increasingly affordable all-electric cars.
Still, that's ambitious considering the company only plans to produce 5,000 versions of the car this year. By boosting production volumes, Tesla could very likely become a mass-market producer of electric cars. Given Musk's track record and the company's ability so far to underpromise and overdeliver, I'm confident that Tesla can meet these expectations.
A more electric world
Assuming the Model S launch is a runaway success and Tesla gets up to speed in terms of its manufacturing process, the auto industry as a whole still faces strong headwinds. With a lack of infrastructure in place, electric vehicles still have miles to go before hitting mainstream acceptance. The shift to EVs and sustainable energy isn't going to happen overnight. However, companies like Tesla are helping us accelerate in that direction.
Other major companies outside of autos are also supporting this shift toward electric-powered transportation. General Electric
I have no doubt Tesla's Model S will be a success, which is why I stand by my CAPScall of outperform on the stock. Bigger picture, I suspect Tesla will help transform the auto industry. Click here find out what other companies are disrupting the manufacturing world in this special free report from The Motley Fool titled "The Future Is Made in America."
Fool contributor Tamara Rutter owns shares of Tesla Motors. Follow her on Twitter, where she uses the handle: @TamaraRutter for more Foolish insights and investing advice. The Motley Fool owns shares of Ford and Tesla Motors. Motley Fool newsletter services have recommended buying shares of Ford, Tesla Motors, and Goldman Sachs Group; and creating a synthetic long position in Ford. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.