Tesla Motors Inc (TSLA), General Motors Company (GM): The Electric Vehicle Market Is Still Tepid

The company is gradually learning to walk on its own two feet again after receiving a government bailout in 2009. So far, it’s done a good job, with profits returning in 2010. However, sales fell last year from $7.6 billion in 2011 to $4.9 billion. The future of this company’s participation in the electric vehicle market is unclear, and so is its ability to make a full comeback. Unless sales of the Chevy Volt really jolt, I’d keep this stock out of my portfolio.

Tesla on a tear

The Tesla Motors Inc (NASDAQ:TSLA) Model S has actually taken a large, unexpected chunk out of Nissan and General Motors Company (NYSE:GM)’s profits for electric vehicles. Despite the vehicle being more than twice as expensive ($70,890) as either the Leaf or Volt, the company sold 8,850 vehicles in May, on its way to beating both Nissan and GM’s sales.

Tesla Motors Inc (NASDAQ:TSLA)’s stock price has received a jolt since March; that’s when news of the Model S’s appeal really spread. In March, the stock was priced at about $35 per share, and it was more recently trading at around $100.

The company also reported its first quarterly profit after considerable losses in previous years. The first quarter resulted in $562 million in sales and $11 million profit. I’d wait until the scheduled July 22 second-quarter earnings before deciding where this company may go.

When will the electric vehicle market become charged?

According to HybridCars.com, the demand for electric vehicles is starting to increase, but only 32,705 vehicles were sold in May. That represents just 0.5% of industry sales. Once electric car manufacturers are able to solve the perception of battery power being extremely limited, and the difficulty with charging the vehicles, the use will increase.

Right now, I’d put my money with Nissan, due to the company’s diversification and sound financials, though Tesla Motors Inc (NASDAQ:TSLA)’s $100 share price could be justified if the spark that is being started by electric vehicles really catches fire.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends General Motors Company (NYSE:GM) and Tesla Motors . The Motley Fool owns shares of Tesla Motors. Phillip 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 Electric Vehicle Market Is Still Tepid originally appeared on Fool.com and is written by Phillip Woolgar.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.