Most people who have talked about their love for Tesla Motors Inc (NASDAQ:TSLA) have mentioned the company’s electric car technology. Jeffrey Gundlach, the CEO of DoubleLine Capital, which has over $56 billion assets under management, also likes Tesla. However, the reason is different from most other investors who have shared their thoughts about the stock. Gundlach stated that he likes Tesla mainly because of its battery project. On CNBC, FMHR traders weighed in on the sentiments of Gundlach and discussed the opportunities and challenges which Tesla is likely to face.
“[…] I think most people have objectively just looked at the technology and a progress has been made – have to admit that. And then the question becomes: what multiple do I want to pay for that? […] I have studied the greatest stocks throughout the U.S. history. They have never been cheap until the point when they got cheap, and that is historically when you don’t want to own them […],” stated one of the traders.
Tesla Motors Inc (NASDAQ:TSLA) is building a Gigafactory in Nevada from where it will produce batteries to power its electric cars. The batteries from the Gigafactory are expected to help the company lower the cost associated with the production of the electric car, thereby boosting sales. According to Gundlach, the battery project could be a huge opportunity for Tesla. He view is using the batteries cells from the Gigafactory to store energy that can be used to power homes and get people off the grid.
“Maybe I’m thinking too simplistically. But I think the problem for Tesla is going to be where oil prices are. Many will say buying Tesla is not about oil. But to me ultimately, if the energy prices are declining that is going to lead you to buy your SUV from Ford. That is going to lead you to buy your SUV from GM. That is going to be less opportunity for Tesla’s cars,” said another trader on CNBC.
With the Gigafactory up and running, Tesla Motors Inc (NASDAQ:TSLA) is expected to lower battery cost for its vehicles by nearly 30% by 2017. That development will also allow the company to compete in the mass market where it is expected to price cars, Model 3, in the range of $35,000-$40,000.
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