Why Elon Backs Tesla Motors Inc (NASDAQ:TSLA) with élan

Why Elon backs Tesla Motors Inc (NASDAQ:TSLA)

Elon Musk, the Tesla Motors Inc (NASDAQ:TSLA) Chief Executive Officer backs his company and its products with aggression and pride. He never tires of saying that Tesla is not just an ordinary automotive company- it is first and foremost an automotive tech-company.

The fate of other EV/Green Car-makers is being dragged into the current scene and is being turned into an example in time that purportedly, Tesla Motors Inc (NASDAQ:TSLA) should learn something from. Fisker Automotive, Better Place, ZAP motors and Carbon Motors, all evaporated into vanish-land.

Blow Hot Blow Cold

But for the tenacious Tesla Motors Inc (NASDAQ:TSLA), 2013 has been a profitable run. It managed to garner rave reviews for its Model S from owners and the media (despite some scuffles with the latter). Potential Tesla buyers in the Snow Belt got the shivers when there were reports that the winter will mete out a tough toll on the Tesla Vehicle’s range and that its car battery productivity could diminish by 30 % in the winter months.

But with the appearance of spring, that issue thawed and made way for fire ire. Reports of three fire incidents involving the Tesla Motors Inc (NASDAQ:TSLA) Model S cars made the company top the “hot” news ranks and the media had a field day while the stock careened and dropped 40%. The NHTSA is also taking a serious view of these fires and re-looking at whether Tesla truly is “the Safest Car on the Road”.

In Damage-Control Mode

Of course, Musk came running in to do some damage control and has a handle on things (for the moment). A clever mix of market tweaks, a warranty upgrade and statistics have been used to pacify current customers and hold the interest of potential ones. But skeptics will be skeptics and they will tick-up a storm at the smallest given opportunity. Tesla has emerged from the fire controversy with not much more than 1st degree burns and made heads turn with its 2 profitable quarters.

If you look at the mileage this hybrid car startup company has gained over 2013, it’s not very difficult to see why Elon carries his admiration for Tesla Motors Inc (NASDAQ:TSLA) on his sleeve so to say. At the beginning of the 2013Q2, at $40, the company stock was perceived to be a speculative and volatile one. Six months down the line, nearing the end of the Q3, the stock was a breath away from $200 and cruised into the heart of the Wall Street naysayers. Today, at 2013-end, it stands in the $144.00 range.

The Dealer Sealer

Tesla Motors Inc (NASDAQ:TSLA) is fighting a legal battle with car dealers across different states who state that the company should be stripped of its right of selling its vehicles directly to customers and that just like other car makers, its sales should be routed through dealers. Obviously what the car dealers are thinking is that once the flood gates have been opened, what’s there to stop Toyota Motor Corp (ADR) (NYSE:TM) or say Chrysler from doing the same? And they have been pressing lawmakers to pass the legislation that will either tighten or ban direct sales.

The Stats Game

So, apart from all the breaking and making news, Tesla Motors Inc (NASDAQ:TSLA) is definitely a company to reckon with. The fact is that it is a car maker that has a stock that is priced like a technology company. Currently, Wall Street analysts expect the company’s 2014 revenue to be in the $3.1B range and its current market value of $17.3B is close to 6 times that figure.  In comparison, Toyota’s sales for 2014 are projected to come in at $240B and Ford Motor Company (NYSE:F) is expected to rake in $140B in sales. Both their respective market caps are much lower than their sales figures.

Tesla Motors Inc (NASDAQ:TSLA) investors have been enthusiastic and optimistic and the company’s $20B valuation has imbued it with enough capital to expand its production, Superchargers and global expansion as it eyes the markets in Europe and China. The company’s numbers are impressive. Its revenue doubled from the $204M that it stood at in 2011 to the impressive $413M in the 2012 fiscal year. This year, that amount steps onto the next rung and is slated to hit the $2.3B mark. The company’s balance sheet is balanced in its favor and that is an irrefutable fact.

The Elon Magic

And so, 2014 will see the Model X sport-utility roll onto the asphalt and the lower-priced variant will debut sometime in 2015. This particular model will fulfill the company’s promise of bringing to market a more affordable EV and will make Tesla Motors Inc (NASDAQ:TSLA) a household brand. The Model E is said to be next in queue and  this Palo Alto company might just end up prying the entire market share from Toyota Motor Corp (ADR) (NYSE:TM)’s Prius and even as the year turns a leaf it will blow Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) Leaf  out of the race. Kudos to Elon and the élan with which he is taking Tesla Motors Inc (NASDAQ:TSLA) places.

Priti Desai  is an astute business writer who has been writing about stocks and business long enough to know that the best way to be in sync with the market is to sink oneself into its volatility and irrationality. She feels that understanding business ebbs and tides is about being able to see the flip-side. Every word she writes exemplifies her expertise and knowledge. Money is what makes the world spin while business is what adds momentum to it. Zeroing-in on an exclusive and sui-generis view is about panning the finance landscape and getting a 360° view. Connect with her on pdes17@gmail.com

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