Tesla Motors Inc (NASDAQ:TSLA) Only Competes With Big Brands

Posted by Chris Bell January 29, 2014 0 Comment 909 views

Tesla Motors Inc (NASDAQ:TSLA)’s flagship vehicle Model S is often brought up in comparison with other electric vehicles but the company insists that the Model S doesn’t really fall in this category. The fact that the Model S is not really in the same segments as most EV is true and the speculation on this idea will only help guide Tesla’s stock higher.

“We don’t compete with EVs,” said the VP of corporate and business development, Diarmuid O’Connel at the Detroit Auto show. He added that the Model S was designed to compete with vehicles like the BMW 5 series or even the Mercedes S and E classes. He ended saying that despite their move into China soon, the company doesn’t intend to compete with Chinese car maker BYD.

Well laid out plans

Tesla has planned out this strategy very well as the global sales for cars in this segment are huge in number. This means that the car maker will have not only a good market to deliver to but the novelty of their model S is sure to bring in lot of sales or at least a boost in sales. Seeing as to how only 200000 EVs have been sold ever, this is a rare thing that Tesla is not in the segment; its stock would surely soar high if it were.

“I really look forward to the day when every car on the road is electric. That’s the goal,” Musk said in an interview to CNN Money. This desire from the company is something that the investors need to understand because Tesla will benefit from the competition it faces from EVs. This will also in effect lower the risk for the company’s growth.

What the future holds

Expecting Tesla to grow in the EV market only will be an underestimation of its true potential as it has already proven that it can survive in a market without EVs. In its very first year when the Model S was launched, Tesla saw a rise of 8% and more in the luxury car segment. If the same effect recreates itself when they launch an affordable car by 2016 or 2017, expect big things.

About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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