Tesla Motors Inc (NASDAQ:TSLA) is an incredible company. The firm is one of the first to really popularize the electric car, and it is certainly the first to popularize it in the luxury segment of the market, but is Tesla worth investing in, and can it really be the growth stock Apple Inc. (NASDAQ:AAPL) used to be?
One author, Paul R. La Monica, writing on the CNN money blog, seems to think so. La Monica says that Tesla Inc (NASDAQ:TSLA) is disrupting the entire industry, mirroring the effect that Apple Inc. (NASDAQ:AAPL) had on the smart phone and the PC industry in the last decade, but he stops short of recommending the stock effusively.
Brook Asset Management was up 7.27% for the first quarter, compared to the MSCI GBT TR Net World Index, which returned 3.96%. For March, the fund was up 1.1%. Q1 2021 hedge fund letters, conferences and more In his March letter to investors, which was reviewed by ValueWalk, James Hanbury of Brook said returns during Read More
There are problems with Tesla Motors Inc (NASDAQ:TSLA), however, and unless it solves those it can’t disrupt the entire industry, nor can it continue to add value forever. The big five problems that face the company are production, price, policy, power and, non-alliteratively, emerging markets.
Price is obvious. The company’s lowest priced Tesla S costs more than $60,000. That’s far too high for most Americans to afford. Apple Inc. (NASDAQ:AAPL) introduced a product that allowed it to reach all parts of the market, particularly after it had wrangled subsidies. The subsidies Tesla Motors Inc (NASDAQ:TSLA) gets from the government can’t match those Apple Inc. (NASDAQ:AAPL) managed from carriers.
This links in with policy. Tesla Motors Inc (NASDAQ:TSLA) has created a great product and it’s very popular with some parts of the auto market, but the car requires more of a push than the company can itself provide in order to really shake the market. The current government subsidy is around $7,500. That’s good, but Tesla needs more help if it’s going to change the market like Apple Inc. (NASDAQ:AAPL) did.
Even if Tesla manages to get the government to change policy and lower the price of the vehicles to consumers, the company is still going to have huge problems. Right now, Tesla Motors Inc (NASDAQ:TSLA) has basic production problems, something that Tim Cook managed to solve at Apple Inc. (NASDAQ:AAPL). Tesla needs to do the same.
Power, relates to the infrastructure and range of the vehicles. Tesla has made strides on both, but it needs to do more and that means technological advancement. Emerging markets are the big one, however. It took the iPhone 3 years to hit China, who’s betting the electric car takes off there that fast?