Tesla Motors Inc (TSLA) Test-Drives World Domination

Not only do traditional automakers benefit from economies of scale — something Tesla does not — but they also have massive dealer networks to help market and distribute their cars and trucks. Ford sold 5,695,000 vehicles worldwide in 2011 through such dealership channels. That’s a level that Tesla can’t even dream of reaching at today’s rate. However, widespread distribution overnight is not Tesla’s intention at this stage in the game.

Tesla, which owns its sales and service network outright, is betting on a new car buying experience that centers on the customer. By calculatedly placing its stores and galleries in high foot traffic areas, such as shopping malls Tesla is inviting people to learn about and interact with its Model S in a no-pressure type of environment.

Having visited several of their store locations in Miami, D.C., and Chicago, I’d say Tesla’s strategy looks to be paying off. During each of my visits, the stores were packed with potential customers whom seemed eager to learn more about Tesla’s high-tech cars. This is a good sign for the company as it expands its reach overseas in the year ahead.

The takeaway
In addition to doubling their stores count in 2013, Tesla is also on track to boost production of its vehicles by 25% this year. In one sense this will help Tesla reservation holders get their new zero-emissions cars faster. In another, it should help the company reach profitability sooner than previously expected.

All of these factors bode well for Tesla’s stock performance going forward as well. Shares of Tesla are up more than 5% year to date and trade around $36 apiece. Moreover, I suspect the stock will climb higher in the quarters to come, as the company’s retail strategy begins to play out.

The article Tesla Test-Drives World Domination originally appeared on Fool.com and is written by Tamara Rutter.

Fool contributor Tamara Rutter owns shares of Tesla Motors and Tesla Motors. The Motley Fool recommends Ford, General Motors, and Tesla Motors and owns shares of Ford and Tesla Motors.

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