Tesla Motors Inc (TSLA): Why Are Some Investors Bearish?

The loan to Tesla Motors Inc (NASDAQ:TSLA) was also more critical to the company’s survival than those to Ford Motor Company (NYSE:F) and Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY). Both of these major automakers used the funds to develop vehicles that are not expected to contribute significant revenues for a number of years. The Ford Focus Electric and the Nissan Leaf both are good ways for the companies to real world test emerging technology but at a price well above comparable gas vehicles, sales have not lived up to most expectations. Despite this, look for future development of electrics from these two companies as they improve the technology and drive down the price of it over time.

Compared to Tesla Motors Inc (NASDAQ:TSLA), Ford Motor Company (NYSE:F) and Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) are automotive giants. Valued at $55 billion and $44 billion respectively, the millions of cars produced by both companies to generate the revenue needed to fund research for new technologies, a small part of that funding being for electrics. Even so, investors should not buy these two companies for their EV prospects because, as a percentage of total sales, the Focus Electric and Leaf are almost meaningless. Instead, investors should look at the traditional business behind the automakers examining earnings potential, dividends (both companies pay one), and using comparative industry valuations. Investors that choose to buy shares based on this information will then be able to count EV sales as an added bonus to their investment.

Tesla’s future

With an announcement of profitability, Tesla Motors Inc (NASDAQ:TSLA) shares have turned sharply higher in the month of April. This takeoff in Tesla shares follows the ramp up of production to at least 500 Model S sedans per week. Reservations continue to be added and with expansion into Europe and Asia coming soon, we could see and even larger increase in reservations from regions where gas prices are higher and EV incentives are greater. While still a risky investment, Tesla is not as risky as it once was. As more Teslas hit the roads, myths surrounding them should begin to be dispelled by both the owners and by the cars themselves.

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