Tesla (NASDAQ:TSLA) has been a mind-boggling topic of late. From its seemingly overnight appearance in the auto industry, which no one believed a start-up company could break into, to its three-month price jump from less than $40 a share to more than $100, consumers and investors can't get enough. Tesla and its founder, Elon Musk, have shaken up the industry with a revolutionary electric vehicle ... or luxury vehicle ... or is it both?
Whatever its segment niche is, as long as the Model S backs up the hype, the future is bright for Tesla, right? Perhaps that will be true, but automotive juggernauts Ford (NYSE:F), General Motors (NYSE:GM), and Toyota (NYSE:TM) will have a lot to say about that.
Let's check out some of the details and see if Tesla's Model S will remain a bright spot in the industry, or if it will be just a flash in the pan.
Overview and expectations
Consumer Reports labeled the car as nearly perfect, and one of the best cars it's ever tested -- awarding the Model S a score of 99 out of 100. Practically its only fault, if you can call it that, is the recharge time the car needs after driving long distances -- taking about six hours through a regular 240-volt outlet.
Tesla's nimble and exhilarating electric sports car didn't stop with just one award. It also took home Motor Trends "2013 Car of the Year." It was the first vehicle in the award's 64-year history to win without an internal combustion engine.
I know my saying "exhilarating electric sports car" might raise a few eyebrows. But consider that the sport-tuned Model S can accelerate from 0 to 60 in just 4.3 seconds -- pretty darn quick. Earlier this year, Automobile arranged a test for its magazine, and the Model S topped a 560-horsepower BMW M5 in a race to 100 MPH.
"It's the performance that won us over," Automobile Editor-in-Chief Jean Jennings had to say afterward, in the magazine's January 2013 issue. "The crazy speed builds silently and then pulls back the edges of your face. It had all of us endangering our licenses."
For some of us, it goes past what the Model S actually is, and more to what it represents. Detroit's Big Three have all seen their share of successes, as well as disasters -- more of the latter in recent years. While Ford has given us a reason to cheer a business that didn't take taxpayer funds in a bailout, it hasn't created anything truly revolutionary. Moreover, if two years ago we were asked which country's automakers would have the next breakthrough vehicle, "America's" probably wouldn't have been the answer. Tesla changed that, and it has given Americans reason to be proud and say that we can still innovate greatness. Few companies can say that with conviction, but Tesla and Apple both come to mind.
Tesla's Model S definitely lives up to the hype, in terms of performance, but let's take a look at the interior.
The first thing that will catch your eye will definitely be the humongous 17-inch touchscreen. The first thing that will escape your mouth will be "wow." As your fingers immediately gravitate to the screen, you'll notice its functionality is as wide as the screen itself. At your fingertips are controls for HD radio, online radio, Internet, or Bluetooth, as well as navigation through Google Maps and controls for the glass roof. You can monitor the energy consumption during your trip as well as see what's behind you with the full HD backup camera. The list goes on, but we have other features to cover here.
One of my personal favorites in luxury rides is an all-glass panoramic roof, and the Model S delivers. According to Tesla, it's constructed from lightweight glass and can open wider than any other sedan's panoramic roof.
In addition to the tech savvy and luxurious interior, I was completely surprised to learn it can fit five adults and two children. Its rear-facing child-seat option provides the space, and it's still optimized for safety. If you're looking for more storage space, the Model S offers a unique solution -- a drop-in center console. It slides into the existing space between front seats and can carry drinks or provide a place for phones and tablets.
To me, it's very clear that Tesla's Model S completely backs up the hype in every aspect and gives good old American innovation another leg to stand on. Consumers and critics are satisfied, but how about investors?
As I mentioned, Tesla's stock has been soaring over the past couple of months. Its rise has been fueled by the success of the Model S and the company's surprise quarterly profit.
I love the idea of Tesla as a long-term investment, but I'm not sure I'd buy in at this price. At today's lofty valuation, Tesla will be forced to report years of solid revenue and profit growth to justify its share price -- which it could very well do.
Let's not forget, however, the massive balance sheets and power of the globe's biggest automakers. Consider that Ford's F-Series -- America's best-selling vehicle for 31 years -- sold more than 640,000 vehicles last year, compared with Tesla's goal of selling just over 20,000 Model Ses this year.
Tesla has a breakthrough vehicle, no doubt about it, but it also isn't immune to copycat competition. If it goes mainstream instead of filling a luxurious niche, global automakers easily have the balance sheets to rapidly develop a vehicle to compete.
Tesla's future indeed may be bright, but the only thing guaranteed in investing is that it will surely hit a speed bump along the way -- and that may be a better point to jump on for an investment.
Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford, General Motors, and Tesla Motors and owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. 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.