Mr. Market Loves Tesla Motors Inc (TSLA), But Analyst Opinions Are Mixed

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General Motors Company (NYSE:GM) has also released the new Chevrolet Spark EV with a lower-than-expected starting price of $27,495 and is offering discounted lease rates on both the Volt and the Spark EV.

Meanwhile, Japanese automaker Nissan Motor Co., Ltd. (ADR) (NASDAQOTH:NSANY), which has plowed $5 billion into battery-electric technology, has backed down from an earlier forecast of 10% market share for electric cars by 2020 as the company only sold 9,819 Leafs (the company’s newest electric vehicle) last year in the US, well under its target of 20,000.

And there is more trouble to come with the BMW i3 and the Cadillac ELR both hitting the market later this year. Tesla Motors Inc (NASDAQ:TSLA) still has its niche market, but is it enough to support its current stock price?

Future technology could make Tesla obsolete

Hydrogen fuel cells and natural gas are both more convenient fuels and both are becoming more popular as an alternative to electric vehicles. Daimler AG (USA) (OTCMKTS:DDAIF), Ford Motor Company (NYSE:F) and Nissan Motor Co., Ltd. (ADR) (NASDAQOTH:NSANY) plan to launch affordable hydrogen fuel cell cars within five years, while Toyota Motor Corporation (ADR) (NYSE:TM) and BMW aim to do so by 2020. Fuel cells can cover more range and are cleaner than electric cars.

Investors should be worried. During June alone, one electric vehicle producer and two affiliates of failed US electric car maker Coda Automotive filed for bankruptcy.

Foolish Summary

Tesla is a good company and its products are market leaders but to fulfill its current valuation, Tesla needs to achieve explosive sales growth over the next few years, a feat that many analysts believe the company cannot do.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool recommends General Motors and Tesla Motors . The Motley Fool owns shares of Tesla Motors . Rupert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article The Market Loves Tesla, but Analyst Opinions Are Mixed originally appeared on Fool.com is written by Rupert Hargreaves.

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