Tesla has gone from being just another car company to becoming a stock, first and foremost. In fact, in order to succeed, Tesla actually needs to be considered a stock. Musk & Co have to pay particular attention to this point if they want to wear down Wall Street walls and continue its upward success. The company is already attempting to take Tesla to the next level with the release of its Model X SUV in October and the new mass-market electric car to be released some time in 2017. Let’s not forget to mention building at least one massive battery factory. Indeed, the Tesla story is an attractive one and investors all around the world want a piece of the action.
However, the auto industry at large is a whole different tale. Sales in the US reached over 16 million in 2014 for new car sales so far this year, with gas-powered cars doing exceedingly well. The auto industry has obviously recovered from those gloomy days of 2009 that it suffered through. Now that gas prices are generally stable once more, Americans feel more confident in buying trucks and SUVs again, which is excellent news for car manufacturers who see greater profits from these models.
On the other hand, the electric vehicle market has seen a decline where every other electric car manufacturer other than Tesla has disappeared off the radar. This has certainly been one of the main incentives for Musk & Co to release all of Tesla’s patents and revamp the startup EV market so that it doesn’t face being in a market of one.
Even major automakers like Nissan, Chevy and Fiat have all stated that electric cars have not been worth their investments. Nissan Leaf sales were incredibly weak, with the Chevy Volt selling even less. And CEO if Fiat/Chrysler, Sergio Marchionne, even went on record announcing that the electric Fiat 500 wasn’t worth buying. So it’s not a case of there being Tesla and everyone else for people to choose from (and them picking Tesla). It’s a case of there being Tesla and no one else (and that’s why customers pick Tesla).
While Tesla’s market is without direct competition to date, analysts predict that will change eventually. But that’s a very big and far eventually for now. On the other hand, Tesla does still face completion of traditional automakers where price is concerned. A lot of customers choose to but 5-6-figure vehicles that run on gas rather than take that leap of faith in the only car Tesla currently offers, the Model S sedan.
When it comes to stocks, Tesla is doing impressively well. While GM’s stock saw a huge decrease (down 15% from last year) and Ford’s stock increased (up 14% from last year), Tesla’s stock rose about 80% year-to-date! Obviously that’s not just the car company figure, but the entire tech company return.
While Tesla is in the car business, it’s simply not in the same niche car business as everyone else. And it’s enjoyed undisrupted success that other competition has given up on trying to take a piece of its pie. For now, other traditional automotive companies will continue to sit back and witness Tesla’s growth (possibly taking notes and studying them intently too), until they decide once and for all what they can offer this industry and whether entering it is worth it for them. Until then, Tesla and all of its investors can enjoy the safe ride up.