The firm leads in overall electric vehicle sales with the Leaf (according to the New York Daily News), and on June 20 released an upgrade to the car’s battery. That’s a good sign for investors, as it shows advancements are being made in battery life. A short battery lifespan has been the bane of electric vehicle companies because the perception of the EVs not having much juice has turned buyers away. Each step forward in battery technology should lead to increased sales as concerns about running out of power will wane. By offering a free battery upgrade for American Leaf owners, the company is also building customer loyalty, and that bodes well for future prospects at the firm.
Furthermore, with a price-to-book ratio of 1.1, which is below average in the auto and truck manufacturers sector, the firm looks attractive at its current price and appears undervalued, according to RBC Direct Investing. Add in a price-to-earnings ratio at 12.4 and investors have an average growth expectation from the firm. Purchasing the company now, before the masses catch on to its real growth potential, could result in major profits.
The competition: Tesla Motors Inc (NASDAQ:TSLA)
Tesla Motors Inc (NASDAQ:TSLA) recalled 1,228 units of its luxury electric vehicle, the Model S. The recall was for Model S cars made between May 10 and June 8, and was due to a defect in the mounting bracket on the rear seat. The recall doesn’t effect the mechanics of the vehicle, and shouldn’t be taken as a sign of poor quality. In fact, Tesla Motors Inc (NASDAQ:TSLA) is a stellar company with a lock on the luxury electric vehicle niche and should see increased sales as technology improves.
The firm is outrageously priced, however, and likely doesn’t justify it with growth potential. While Tesla is a leading-edge company, it faces a slew of competition that could just as easily move in on the luxury electric vehicle market. The company has one of the highest price-to-book ratios in the entire vehicle manufacturing sector, at 71.5. That’s nearly a 181% increase from last year. However, sales of the Model S have been stellar, with 8,850 sold in May, according to Reuters — that compares to 7,614 Nissan Leafs and 7,157 Chevrolet Volts.