Tesla Motors, Inc. TSLA was established with the aim of facilitating the transition of the automobile market to environment-friendly electric vehicles. It is the only automaker that limits itself to producing electric vehicles and stays away from gasoline, diesel, hybrid and even hydrogen fuel cell vehicles.
Yet, in its short 12-year lifespan, Tesla has managed to create a strong brand name, generate tremendous brand loyalty and gain global media attention that rivals those of well-established veterans like Ford Motor Co. F and General Motors Company GM. In fact, Tesla has even been compared to Apple Inc. AAPL, and its CEO Elon Musk to visionary Steve Jobs.
This raises the question whether the company can revolutionize the automotive world as Apple did in the technology sector. Tesla loyalists would say that it is already doing so, and in many ways, this is true. The company has set new performance benchmarks for electric vehicles and played a major role in popularizing this product category in the luxury vehicle market.
To popularize electric vehicles, Tesla is even developing a network of Superchargers that provide free and fast charging to vehicle owners, incurring high capital expenditure in the process. Further, to deal with the shortage of lithium-ion batteries, the company has been constructing a $5 billion Gigafactory in Nevada to produce the batteries, in collaboration with various partners. The factory will produce enough battery packs to allow Tesla to build around 500,000 electric cars by 2020.
However, the true revolution will happen when Tesla, currently carrying a Zacks Rank #3 (Hold), achieves its ultimate goal of producing an affordable electric car for the mass market. The company’s third generation electric car, Model 3, is expected to cost half as much as Model S, and is meant to serve the mass market.
If Tesla is able to bring electric cars to the masses at a cheap rate, it will go a long way in popularizing this niche product segment. In fact, if its mass-market car ends up being as successful as its luxury vehicles, Tesla may alter the landscape of the automobile market.
Looking for the next stocks that will revolutionize their industries? Make sure to read more about the newest Zacks portfolio, Game Changers, and how this service will find companies poised to disrupt their markets. Click here for more information about this brand-new portfolio >>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment