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

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!