Tesla Motors Inc (TSLA): Will It Keep Winning?

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Tesla Motors Inc (NASDAQ:TSLA) reports its latest quarterly earnings in a matter of hours, and it’s got to stand up to some big expectations in order to wow investors. The stock has risen 64 percent so far this year, mostly because it announced earlier that the first quarter of this year was going to be its first profitable one.

Tesla Motors Inc (TSLA): Will It Keep Winning?

But can shares of Tesla Motors keep it up? The Wall Street Journal contributor Spencer Jakab doesn’t think so. He questions whether Tesla Motors Inc (NASDAQ:TSLA) is really worth the valuation it’s been given. He said even if Tesla’s sales jump over six times to more than 20,000 vehicles as the company expects, that places a debt-adjusted market value per vehicle that’s 90 times as high as General Motors Company (NYSE:GM)’s is.

Of course it doesn’t make a lot of sense comparing the vehicles GM makes with those made by Tesla. Tesla is clearly a luxury automaker, although it has said that it intends to make a move into the family auto market with a model that starts out at around $30,000 over the next year or two.

What’s Good For Tesla Now May Be Bad In The Future

One area in which Tesla Motors Inc (NASDAQ:TSLA) can surprise investors in its next report this afternoon is with the sales of emission credits. It made millions in selling those credits last year, and that could certainly be a good think for the company’s revenue in the near term.

However, that source of revenue may not be a long term one. Jakab points out that the fact that state governments could easily do away with those emission credits, which would wipe out a significant revenue stream for Tesla Motors.

Will Tesla Ever Be A Mass Market Automaker?

Jakab is especially critical on whether Tesla, as a maker of electric cars, will ever be a mass market automaker. In my view, electric vehicles like those Tesla makes are the future of automobiles. The U.S. government is tightening restrictions on fuel efficiency. By 2025, officials want vehicles to average more than 50 miles per gallon.

If automakers are going to comply, they’re going to have to step up their innovation. Right now the biggest problem with electric vehicles is the fact that they just don’t have enough range. They’re fine for driving around your own community, but you really can’t travel across country in them because the batteries don’t hold enough of a charge.

So whether or not Tesla Motors Inc (NASDAQ:TSLA) will ever be a mass market automaker remains to be seen, but it makes sense to me that we will see more electric vehicles on the road over the next 10 to 20 years. So why wouldn’t a large portion of those vehicles be made by Tesla?

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