Can Tesla Motors (TSLA) Compete With Big 3?

In an article over at CNN Money today, they highlight the challenges that Tesla Motors (TSLA) will face competing with the Big 3 US auto manufacturers, not to mention a few foreign behemoths such as Honda, Toyota (an investor in TSLA) and Nissan. 

The big disadvantage that TSLA has is inexperience and lack of economies of scale, which puts pressure on profit margins.  The company is pinning the future on the success of the Model S which is set to go on sale in about a year and will be showcased in a test drive this weekend.  The base model performance specs the company is touting are zero to 60 in 5.6 seconds, 120mph top speed and a battery range of 160 miles.  Pretty impressive indeed. 

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By all indications, the Model S will be an impressive vehicle.  That’s not the concern.  The concern is whether they can stop the red ink flow and begin turning a profit quickly once the Model S becomes available.  Elon Musk believes that will be the case as do a few bullish analysts (which include Goldman Sachs & Morgan Stanley).  Critics argue that any proprietary information Tesla is using to create an advantage will eventually be picked up by larger manufacturers in the fiercely competitive auto industry.  I personally have to agree with the critics in this regard, but let’s not rule out a larger role from Toyota which could provide the industry expertise and deep pockets for Tesla to succeed.  Morgan Stanley believes Tesla has a chance to be part of a Big 4 of US auto manufacturers, but that’s probably a long shot.  The odds of the company being bought out by a big competitor is much more likely. 

Technically, shares of TSLA remain relatively bullish on the daily chart and are currently in a healthy digestion period after breaking out nearly a year ago.  There is support around the 21 level and a breakout above the $30 level would be a significantly bullish event. 

3 thoughts on “Can Tesla Motors (TSLA) Compete With Big 3?”

  1. TESLA TAKES GOVERNMENT TAX MONEY SAYING THEY WILL CREATE U.S. JOBS and then hires FOREIGNERS: : Look at the ads Tesla has placed on LInkedIn: “Senior Immigration Paralegal – Tesla Motors- Palo Alto, California (San Francisco Bay Area), etc…”

    Elon Musk made a deal with Dianne Feinstein to take over the NUMMI plant so it would look like she saved jobs but, in fact, almost no NUMMI staff were hired and Tesla does not even know how to set-up the factory.

    John Doerr & Steve Westly ran Steven Chu’s nomination and forced the White House to appoint him and then forced Steven Chu to fund their company: Tesla Motors.

    Tesla cooked the books to get DOE funding.

    The CEO & senior staff lied to the City of San Jose about building their car factory there and those communications are actionable.

    The CEO & senior staff lied to multiple other cities about building their car factory there and those communications are actionable. They always promise a city or country a factory or sales office and then pull out.

    The CEO has been sued by his staff, his wife, his business partners and his suppliers for manipulation and unethical behavior.

    The CEO paid GQ magazine to write a story about him to help him get dates. The CEO paid the marketing group for Iron Man to say that Iron Man was based on him. History has shown that megalomaniacs have destroyed every company they have run.

    The CEO cheated on his wife with escorts while married. The values of the CEO are the values of the Company. Eolon Musk hires most of the escorts in Silicon Valley.

    The car electromagnetic radiation fields from the battery pack cause cancer.

    They bribed officials to get their federal loan and the funds expended by them to get that loan are being traced back to sources. The McKinsey guys at DOE are connected on paper to Tesla in extensive conflicts of interest.

    He was $100,000.00 off, PER CAR, on the cost to build each car. The company has blown tens of millions of dollars on work it had to completely dump in the garbage and start over on.

    The company has numerous consumer complaints on price changes, overheating of the battery and charging system and inability to get 220V without huge premiums for the setup.

    Nobody is buying the cars anymore and there are hordes of competitors with better electric cars.

  2. If what you are saying is true then Tesla would have lost a lot more money than they have.

  3. Ryan, you are an idiot. And apparently, a liar as well.

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