Tesla Motors Inc (TSLA): Two Big Near-Term Challenges


Tesla Motors Inc (NASDAQ:TSLA) has proven its mettle at every step. Not too long ago, it was one of the most shorted stock on the Nasdaq, and even today more than 35% of its total float is shorted. But Tesla Motors Inc (NASDAQ:TSLA) has reported stronger sales with every passing quarter. What’s more, its flagship Model S received a perfect rating from Consumer Reports and was hailed as the best car of 2013.

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However, the electric vehicle maker is facing some near-term challenges that may affect its stock. Let’s take a look at the two big challenges the California-based company must overcome this year.

Tesla’s delivery delays

As Tamara Walsh of The Motley Fool points out, Tesla Motors Inc (NASDAQ:TSLA) has pushed back the delivery date of its upcoming crossover EV by more than a year to late 2014. However, it may be delayed further due to supply constraints. In November, the company reported that manufacturing in Q3 was hampered by a limited supply of lithium-ion batteries.

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When Tesla Motors Inc (NASDAQ:TSLA) showcased the Model X in 2012, thousands of people booked the vehicle by paying $5000. Model X can go from 0-60 mph in just 4.4 seconds, beating Porsche 911 sports car. It can also accommodate seven adults. In short, Model X has everything needed to become a success. But if the company fails to meet its updated delivery date, Tesla Motors Inc (NASDAQ:TSLA) may see some order cancellations.

Tesla’s heavy capital expenditure

The San Francisco-based company is in the growth phase. Tesla Motors Inc (NASDAQ:TSLA) is making significant investments to expand its network of Supercharging stations worldwide. The company is also foraying into new markets such as China. The added expenditure is expected to hurt its bottom line. For the Q4 ending December 31, Tesla Motors Inc (NASDAQ:TSLA) is expected to see a 25% increase in R&D costs, and another 20% increase in general, selling and administrative expenses.


Tesla Motors Inc (NASDAQ:TSLA) will be finishing its coast-to-coast network of Superchargers in just a few months. The company aims to cover 80% of the U.S. population by the end of this year, and 98% by 2015. Tesla Motors Inc (NASDAQ:TSLA) said its customers can charge their vehicles for free as the company itself will be paying the electricity bills.

Another concern is the rivalry from other automakers with decades of experience and much deeper pockets. But that doesn’t seem to be a big challenge because Tesla Motors Inc (NASDAQ:TSLA) is still unrivaled in the electric vehicle space. The automaker has an exceptional track record with perfect strategy execution. So, we expect Tesla Motors Inc (NASDAQ:TSLA) to overcome these challenges.

Tesla Motors Inc (NASDAQ:TSLA) shares fell 0.37% to $148.80 at 9:31 AM EST.


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