The Next Big Thing: Tesla Motors

by FI Fighter on July 10, 2013

in Clean Energy, Stock Investing Thoughts

Tesla

Tesla Motors (TSLA) has been in the news a lot lately, and for good reason — the future has arrived. I live in the Bay Area, and it has become impossible for me to drive around town for a day without seeing a Model S on the road. Just like with what Apple (AAPL) was able to accomplish with the iphone and ipad, I really believe that the future of the automotive industry belongs to Tesla.

Check out this video below!

For the most part, people are skeptical to the idea of an all electric vehicle becoming mainstream. They cite range limitation, lack of charging stations, high price tag, etc. These concerns are all valid, but Tesla has a plan in place to address all these so called “limitations”. BlueStar (Gen III) will be more affordable, at around $30,000, battery technology will improve charge density over time, supercharger stations are being built all across the country, and the just unveiled battery swap feature will allow you to fill up faster than you could pump a full tank of gas! It always seems like Tesla is one step ahead of the critics. With Elon Musk leading the way, can this thing really fail? Does Tesla have too much momentum to be stopped?

I’m truly excited for the future. I’m also a huge fan of technology and revolutions. I like seeing industries disrupted by new players who bring in fresh ideas. This is how progress is made. This is how humanity moves forward.

modelx

Model X-Falcon Wings!

I’m also an investor. And right now, TSLA at $125/share looks expensive! From almost any valuation stand point, it’s overpriced. But who really knows? We’re talking about a potential hyper-growth story here! Maybe like Apple, and Google before it. By no means am I encouraging anyone to go out and buy 1000 shares of Tesla immediately. However, I am keeping in my mind the endless possibilities that do exist for such a game changing company. This is a stock worth watching, for sure. I currently own 72 shares (bought back on the dip to $90 in June) after selling 260 shares back in May. Tesla is more than just a car company — it’s a technology company. And even though I swear by the strategy of dividend growth investing, that does not imply that I’m just going to close my eyes and let a potential revolution pass me by.

Disclosure: I am long on TSLA.

Just look at the sheer number of supercharger stations being built in 2013 alone:

Supercharger Stations (Currently Available):

Tesla_2013

http://www.teslamotors.com/supercharger

Supercharger Stations (Available by the End of 2013):

tesla_2014

http://www.teslamotors.com/supercharger

The people have spoken… and they want Tesla to be able to sell direct to customers!

White House Petition:

tesla_petition

https://petitions.whitehouse.gov/petition/allow-tesla-motors-sell-directly-consumers-all-50-states/bFN7NHQR

Please share your thoughts!

{ 13 comments… read them below or add one }

1 Kurt @ Money CounselorNo Gravatar July 10, 2013 at 8:02 am

I recently spent a long weekend in the Palo Alto area and Teslas are everywhere. With oil hitting $105/bbl today (and higher in the future), the market inevitably will move to electric vehicles. I can’t afford a Tesla, but my next car will definitely be all-electric.

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2 FI FighterNo Gravatar July 10, 2013 at 7:01 pm

Kurt,

Yeah, I’ve been noticing more and more of them on the road recently. We even have two at my company now, and I can’t stop from staring at them each time I walk pass them! It’s a really sleek, sexy looking car.

The Model S is out of my price range too. Same for Model X. But maybe Gen III will be in the cards, someday.

Thanks for stopping by!

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3 MartinNo Gravatar July 10, 2013 at 8:10 pm

Do you know for how much do they sell those cars? If the price is too high it may defy all benefits of having electric car. Also I am interested in how much does it cost to charge the car and the mileage. I’ll try to check it out, unless you know and help the lazy man out by telling me right away…

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4 FI FighterNo Gravatar July 10, 2013 at 8:41 pm

Martin,

From The Tesla website, a Model S w/ 85 kWh battery starts at $72,400. The Performance Model starts at $87,400.

The supercharger stations are free for life (so they claim) and take about 20-30 minutes to replenish 1/2 charge. If you are in a rush, the 1 minute and 30 second battery swap costs about as much as a tank of gas to use. The car gets around ~250 miles per charge from most reports I’ve read.

The Model S is pricey since it’s just the beginning. In a few years, Gen III will arrive, which will be designed for the masses. I would imagine that it’ll be this car that really gets the sales going. Model S simply proves that an electric car is a viable concept. It received the highest score ever from Consumer Reports, 99/100. It’s widely recognized as one of the finest automobiles ever built.

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5 MartinNo Gravatar July 16, 2013 at 10:52 am

So you are saying I can charge the car for free for life? Wow, that makes it an interesting deal I guess. the mileage isn’t that bet either, considering it is an electric car. A typical pick up truck can get you around 350. The price is like a large SUV, if you travel a lot it may be saving you some money on gas. Not sure however. I might do some number crunching… (but not now, I am lazy right now)

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6 FI FighterNo Gravatar July 17, 2013 at 9:55 pm

Martin,

Yep, free charge for life! Lots of tech companies around here have free charging stations as well. So, not only is it easier for you to find parking, you can also charge while you’re at work at no cost! I’m seeing a lot of Chevy Volts and Nissan Leafs as well.

The range is solid. I think 200 miles is the target for Gen III right now. That sounds about right, and enough so that a person doesn’t have range anxiety. I can’t imagine owning a Leaf since it gets less than 100 miles/charge. I would start worrying as soon as I get out of my driveway!

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7 Compounding IncomeNo Gravatar July 10, 2013 at 9:29 pm

I’ve personally never seen one of these. They don’t exist here.

However, if they can get the price down to 20k-30k and saturate recharging stations, then we are talking about something!

Still never seen one…

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8 FI FighterNo Gravatar July 10, 2013 at 9:37 pm

CI,

I’m in the Bay Area, so they are very much everywhere around here. Right now, most people who own Tesla’s live on the coasts. In a few years, they will become a household name.

Take a look at this video: http://www.teslamotors.com/batteryswap

It’s hard not to get excited about a company that continues to show such innovation and passion for doing things differently (better). I haven’t been this excited about new technology since the ipad…

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9 Compounding IncomeNo Gravatar July 10, 2013 at 9:47 pm

You know I’m an income investor and would not consider TSLA because owning shares would not increase my income stream. What else stands to gain from electric cars and increased electricity usage? Electric utilites. Natural gas producers (raw material to make electricity). Natural gas pipeline companies.

Perhaps stocking up on these types of companies could make sense to an income investor if this does happen. SO, KMI, PPL, etc? With less risk and less potential gains though too. Just a though.

Articles like this one are definitely worth thinking about!

I wonder how far off TSLA is from moving the technology into trucks, semis, heavy machinery, etc. Vehicles that perform work.

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10 FI FighterNo Gravatar July 10, 2013 at 9:57 pm

CI,

I hear where you are coming from. Like you, my focus is to build a reliable passive income stream. TSLA does not, and will not pay dividends (for the foreseeable future).

Therefore, a stock such as this should never be a staple in an income investor’s portfolio. However, I am making efforts to allocate a portion of my investments into growth stocks. More specifically, hyper-growth stocks. These aren’t always easy to identify, but I’d like to avoid another black swan event (e.g. AAPL) and shake my head later, wondering why I didn’t invest in an obvious winner sooner. With TSLA, I very much want to get in before it becomes a household name.

Interesting point on the other possible segments for EV entry. Or how about an EV motorbike? Man, that would be sweet! It’s possibilities like the ones you mentioned that make me want to own more share of this stock.

Cheers!

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11 MartinNo Gravatar July 16, 2013 at 10:53 am

I agree. It may be a great company, but it doesn’t pay dividends, so i must pass it on as well.

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12 The First Million is the HardestNo Gravatar July 12, 2013 at 2:14 pm

They’re an interesting story to say the least. The technology is exciting & I’m pulling for them to succeed and drive change within the industry. As an investment I feel like the stock price has been run up really high over the recent excitement, but it’s a real temping company if the price comes back down to earth a little bit.

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13 FI FighterNo Gravatar July 16, 2013 at 8:30 am

Speaking of coming back down to earth, TSLA is down over 8% as we speak. $116… I may need to make another move soon!

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