Tesla Motors Inc (NASDAQ:TSLA) has built its fortune by bringing in capital by working with other automakers, and selling the zero emission credits on to dirtier automakers. That’s part of the company’s beauty, it leverages the current market to bring change. This has led to the company being titled a “disruptive force.” Tesla is about to find out what that really means.
Tesla Motors Inc (NASDAQ:TSLA) has, by its very success, created a market for electric cars in the United States. The amount of Tesla publicity hitting the auto market is enlarging the market for EV. A bigger market means bigger revenues, and that means more competition.
ValueWalk's Raul Panganiban interviews JP Lee, Product Managers at VanEck, and discusses the video gaming industry. Q4 2020 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview With VanEck's JP Lee ValueWalk's ValueTalks ·
Tesla Motors Inc (TSLA) Competitors:
It’s not like Tesla is the only electric auto maker in town. It is, however, the only one that matters right now. The company’s competitors, like the General Motors Company (NYSE:GM) Chevy Volt, don’t make much money for their sellers, and aren’t up to the standard of the Tesla Model S.
That’s about to change however. Analysts love comparing Tesla Motors Inc (NASDAQ:TSLA) to Apple Inc. (NASDAQ:AAPL), both are very disruptive. Apple Inc. (NASDAQ:AAPL) managed to attract a horde of competitors to the tablet and mobile phone markets, Tesla Motors Inc (NASDAQ:TSLA) is bound to do the same, and the company might have a tough time keeping up.
This happens every time a market is disrupted, or a new one is created. One firm earns large profits for a short period of time, and those profits attract others into the market, compressing margins, lowering prices and raising costs. Tesla Motors Inc (NASDAQ:TSLA) will see this happen to electric vehicles, but there’s no telling how soon it could happen.
Tesla Motors Inc (NASDAQ:TSLA) holds the future in its hands, but that doesn’t mean that it can keep it guarded forever. When Apple Inc. (NASDAQ:AAPL) launched the iPhone, it was already swimming in capital from its massive sales of iPods in the five years before. Tesla Motors Inc (NASDAQ:TSLA) is still running on a comparatively low base, and patent fights might be just around the corner.
If there is a tech company to be respected right now it’s Tesla Motors Inc (NASDAQ:TSLA). The company has established a market where there was none before, and the market has recognized its achievement. That doesn’t mean that the company can dominate the electric car market forever, the company’s future is still up in the air.