Investors are putting more faith in Tesla Motors Inc (NASDAQ:TSLA) shares by investing in them and in turn supporting the unconventional strategies adopted by CEO Elon Musk to run this electric vehicle car company.
Tesla’s 2Q estimates
Analysts are expecting that Tesla Motors Inc (NASDAQ:TSLA) will face 17 cent-share loss in its second quarter earnings due on Wednesday. For current fiscal, analysts are estimating that the company will lose 68 cents per share this year and earn 50 cents per share next year.
Tesla Motors Inc (NASDAQ:TSLA) can achieve 25 percent gross margin by the end of this fiscal, thinks CEO Elon Musk, which implies that cost of building cars will be three quarters of the revenue it collects from sales.
Tesla vs. Ford and others
Automobile Industry is measured on the parameter of economies of scale and considering this, Tesla Motors Inc (NASDAQ:TSLA) is running short as it delivered only 1,400 Model S electric sedans in July, according to Autodata Corp, which constitutes only 1 percent of Ford Motor Company (NYSE:F)’s United State sales for the month, says a report from The Wall Street Journal by Mike Ramsey.
Forward price/earnings ratio for 2014 is expected to be 289 compared to Ford’s PE of slightly under 10 and Toyota Motor Corp’s P/E less than 1 all based on 2014 earnings estimate, according to Zacks.
Though, the share price has surged up four times in the previous year and is trading around $142.15 currently. Tesla Motors has a market capitalization of around $17.15 billion, which is again one-fourth of Ford’s and around 70 percent of Fiat SpA- majority stake holder of Chrysler Group LLC.
It’s hard to pin point future target price
Perception about car companies is made on their financial results, in the near term, and investors are expecting a result from Tesla that does not seem to be feasible in the near term or until sometime in the next decade.
Analysts at Wall Street who are optimistic are not going too far and have set the price target, which is considerably less than present market price.
Barclay’s senior analyst Brian Johnson sets $90 per share target, and for Tesla to attain this level needs to pitch itself in entry level luxury car market, which will be priced around $42,000 and $45000.
There was no comment from the company’s spokesman about the market price and second quarter result of Tesla Motors Inc (NASDAQ:TSLA) due on Wednesday. But in the past everyone has heard CEO and other company officials who are confident about manufacturing 400,000 or 500,000 cars per year and achieving market capitalization of as much as $43 billion by 2022.
Achieving that kind of growth is only possible when Tesla can practice perfect manufacturing execution, continued annual growth and resolve consumer concerns about driving range and upfront costs that affect demand for all electric vehicles.
Drive won’t be easy
Tesla Motors Inc (NASDAQ:TSLA) will face more challenges ahead as there are manufacturers in the market who are giving an electric car for less than $40,000 but even then could not build up on volume. Nissan Motor Co., Ltd. (ADR)(OTCMKTS:NSANY) Leaf, which has a starting price tag of $28,800, is estimated to sell less than 50,000 cars this year on a global basis.
Brands like Bayerische Motoren Werke AG (FRA:BMW) (ETR:BMW) and GM are also rolling out their own models like i3 and Cadillac ELR plug-in in hybrid respectively.