Tesla Motors Inc (TSLA): Can It Go the Distance?

The negatives behind Tesla

Currently Tesla Motors Inc (NASDAQ:TSLA) is a non-union company.  With the smaller production size the employees have not yet unionized.  Being in a pro-union state California, it is likely we will see unions form.  This will drive up labor cost and bring up employment problems in the future.  This shouldn’t be a major concern but unions can cause problems throughout companies, as we recently saw with Hostess.  There is no guarantee that Tesla workers will form into unions, but the probability is high and should be a consideration.

Tesla Motors Inc (NASDAQ:TSLA) will need to develop dealerships.  Right now Tesla works out of showrooms with online orders.  This works in a lot of places, but some states have banned Tesla from selling their cars.  They have already tried to get the laws repealed but are coming up short.  If they wish to sell to these markets they will be forced to open dealerships.  Dealerships will disrupt the current Tesla model and eat into margins.

If Tesla Motors Inc (NASDAQ:TSLA) hopes to ramp up sales then they will have to rely on marketing. Elon Musk has already expressed his hate for marketing.  While I expect some money to be spent in marketing I don’t see it being a major expense.

Conclusion

Tesla Motors Inc (NASDAQ:TSLA) has produced some beautiful and stunning cars, that goes with no question.  Elon Musk has had a reputation of building great companies with PayPal.com, SpaceX, and Tesla.  Tesla is the market leader when it comes to BEVs and it looks to remain that way for years to come.  Consumers are already catching on to no longer having to stop at gas stations.  The trend in BEVs should continue to grow as more drivers make the switch from gas to electric.  Overall Tesla is a great company and should have a long future ahead of it. Right now Tesla stock carries a lot of emotion which is causing the stock to be very volatile.  However, I see it outperforming in the years to come.

Adam Beaty has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors (NASDAQ:TSLA) . The Motley Fool owns shares of Tesla Motors.

The article Can Tesla Go the Distance? originally appeared on Fool.com.

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