You must carefully consider the decision to begin investing in Tesla as you should to with all such actions. Despite the praise its cars and other products have received, the company has been persistently dogged by manufacturing issues so it still has to mature into a reliably profitable company.
The Tesla story began in 2003 with the company purpose of selling long range, high performance electric cars. Their current flagship products are premium electric cars, though lower cost models are in production. In recent years, Tesla has sought to move towards becoming an all-around sustainable energy company that offers solar energy and energy storage products and services.
General Information about Investing in Tesla Motors
Investing in Tesla is not like investing in other car companies. Over the past few years the company has been slowly re-positioning itself to becoming a more general sustainable energy company. As of now, the sales of its electric vehicles are its primary revenue source. The public has generally received well the Tesla flagship electric vehicles, such as the Model S sedan. However, they also have got their share of bad publicity. The company is hoping to begin production of a more affordable electric car, the Model 3, by mid-2017.
You can determine the wisdom of investing in Tesla over a long term by how successfully the company can position itself in the energy market and not merely by the volume car sales. It acquired the solar energy company SolarCity in late November 2016 and will integrate SolarCity’s products with its own. The success or failure of the expansion and operation of the Gigafactory will have a significant impact on the company’s future successes.This company massively produces lithium-ion batteries at a lower cost,
Is Tesla Publicly Traded?
Tesla Motors (TSLA) is a publicly traded company since 2010 and its price mostly changes with each half of decade. Hedge funds, mutual fund managers, financial advisers and private investors daily monitor it.
Tesla Motors Stock Price Estimate
Before investing in Tesla, you should also consider the historical data of its stock price. Over the last three years the stock prices of Tesla have been volatile. The change in the stock price translates into large gains are followed by sudden declines. Both of these occur in a volatile manner. The performance of its stock prices resembles more to Silicon Valley tech company than one of the traditional car manufacturing companies.
The news cycle and rises or falls with any story highly influence Tesla’s stock prices. Because of the volatility of the stock, investing in Tesla over the short term is highly risky. A long-term investment in Tesla is the better option. A careful review of the current status and future prospects of the company must be made before investing.
Answering the Debate: Should You Invest in Tesla Motors?
Tesla has been a pioneer in electric vehicles. Their products have changed the popular perception of the awkward, under-performing electric car. Tesla cars have won awards for its performance and style and much of the publicity received has been positive. Tesla has demonstrated that there is a demand for high quality electric vehicles. An important milestone is the sale of the more affordable Model 3. The lower price of this car will make Tesla’s products more accessible to a larger portion of the market.
However, Tesla has shown difficulty adapting to large scale manufacturing of its vehicles and batteries. Tesla’s projects have often missed deadlines and the company delayed the release of the Model 3 until 2018. The company’s financial health has also been a cause of concern for many investors. After multiple quarters of worse-than-expected losses and negative cash flow, Tesla finally posted profits in late 2016.
Critics also believe that the company will eventually sell the Model 3 at a higher price that it announced. This would further hurt Tesla’s long term profitability.
Tesla has also received critics for its acquisition of SolarCity. Goldman Sachs analysts believe that the acquisition was unwise, calling SolarCity an debt-laden, unnecessary distraction. The large amount of cash required to finance Tesla’s ambitious projects is also a source of discomfort for some analysts. A main source of uncertainty in Tesla’s future in the long run is how it would incorporate SolarCity into its business.
Investing in Tesla: A Look to the Future
Tesla will face rising costs in the future due to the:
- Increasing manufacturing costs of the Model 3;
- Expansion of its production facilities and Supercharger stations;
- Financing of the acquisition of SolarCity.
Therefore, it appears unlikely that Tesla will be able to make a profit in 2017. Due to these factors some analysts, including ones at Goldman Sachs, have downgraded Tesla’s stock to sell. Others, though, say that it’s too soon to tell.
Tesla’s plans are ambitious, but if they can pull it off the potential payoff is large. There is a very high demand for high quality and lower cost batteries in many markets. Tesla is currently the largest player in the battery market. The success of the Gigafactory would nicely complement its entry in the solar energy market. In addition, the demand for electric vehicles has been growing, in no small part due to the success of Tesla’s previous models. If the Model 3 production goes as smoothly as Tesla claims that it will, then that is a very good sign of Tesla’s future profitability. The concern for Tesla’s financial health has been largely abated when it manged to raise capital earlier this year.
If production in the Tesla’s Gigafactory continues without major delays or glitches. So if the production of the Model 3 remains on track without an excessive increase in costs, investing in Tesla would be a wise move. But still remains one that is has its risks.
How do you think Tesla will deal with the challenges ahead? What concerns or excites you the most about Tesla or it’s competitors? Share your thoughts with others and give us feedback! Leave a comment below and tell us what you think.