Is The Electric Car Industry Still Viable? – General Motors Company (GM), Tesla Motors Inc (TSLA)

Page 1 of 2

General Motors (GM)The high hopes that the electric car will eventually conquer a substantial market share in the auto industry is still alive and kicking. Sales of leading brands of hybrid and electric cars continue to rise, but their profitability is questionable and the market share remains very low. Despite the small market share and questionable profitability, Investors continue to show their confidence in the industry: shares of Tesla Motors Inc (NASDAQ:TSLA) rose during the year (year-to-date) by almost 13.6%. So is this industry making big strides? Let’s examine the recent developments in the electric car industry.

High growth, no profit

Despite the spike in revenues of Tesla Motors Inc (NASDAQ:TSLA) during 2012 – the company’s revenue grew by more than 102% compared to 2011 – it continues to present a loss. Most of this loss is due to the company’s research & development provision that in 2012 accounted for nearly 66% of the company’s revenue. Tesla Motors Inc (NASDAQ:TSLA) expanded its R&D provision by nearly 31% compared to 2011. Since the company continues to invest in making better and efficient cars, this could eventually lead to a rise in demand for its cars. Until such time, the electric/hybrid car industry is likely to keep on growing but at the same time remaining a small fraction in the car industry.

Sales in the U.S continue to grow

During January and February, sales of electric powered cars (not including hybrids) rose to 9,781 compared to 3,089 cars sold during the same time in 2012. This represents more than a 316% gain. Nonetheless, this industry accounts for only 0.43% of the total number of cars sold during the year to date. Last year the electric power market share was lower at 0.36%. So the market share of the electric power car is rising but remains very small fraction of the total car industry.

During 2012, total sales of electric powered cars (including hybrids) rose by 72% compared to 2011. Total cars sold in the U.S. increased 13.4% during 2012 compared to 2011. These numbers show the sales of electric powered cars are rising at a much faster pace than the total number of cars sold. In 2012, the market share of electric powered cars (including hybrids) was 3.38%. Assuming the market will continue to grow as it did in 2012; the market share of electric powered cars will reach 10% of the total car market by 2015.

Let’s break it down to the leading brands. General Motors Company (NYSE:GM) has its Chevrolet Volt, which is plug-in hybrid vehicle; the Volt is rising in sales, but remains very low in terms of share of total sales of the company. In January 2013, the company sold 1,140 Volt cars; in January 2012 the company’s sales of this vehicle were only 603. The Volt brand is still a drop in the water for General Motors Company (NYSE:GM) as the company sold in February alone nearly 225 thousand cars and in 2012 more than 2.6 million cars. This means the number of Volt cars represent less than 0.5% of the total number of cars the company sells each month.

Moreover, several analysts estimate that this car is loosing money for General Motors Company (NYSE:GM). The numbers go as high as $49 thousand for each car! I’m not sure if this number is correct and it should be taken with a grain of salt. But not all companies are necessarily losing money on their electric/hybrid car.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!