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Tesla Motors Inc (TSLA)’s Long-Term Prospects Overshadow Valuation Concerns

Tesla Motors Inc (TSLA)Over the past year, Tesla Motors Inc (NASDAQ:TSLA) has been a hot topic for analysts, particularly since April when its share price started trending upward astronomically. Since April, Tesla’s share price has gained over 200%. Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) pale in this regard with both recording gains in the 20-30% range. On paper, Tesla Motors Inc (NASDAQ:TSLA)’s rally is commendable. However, critics argue that the stock is greatly overvalued and that it is headed for a major correction. While we can’t entirely rule out the evident valuation concerns, we also can’t overlook the bigger picture.

The new face of investments

Against the backdrop of contemporary investing, new investment patterns are emerging; patterns that will arguably shape the investment space over the next century. There is a progressive shift toward integrating investing with environmental, sustainability and governance factors, or what experts commonly refer to as ESG factors. This shift is not exactly because investors are ‘good people’ with noble causes, but because more and more investors understand the impact that ESG factors have on investments.

In reference to an article authored by Alyce Lomax, it has come out that climate-related threats are material financial issues that could have catastrophic outcomes on companies’ revenues and profits. Lomax picks out the example of Hurricane Sandy and pairs it to the drought that plagued the U.S in the past year. Collectively, these two infamous forces of nature resulted in insured losses of up to $58 billion. In view of this, investors are looking to invest in companies that not only present favorable growth and income prospects, but that also operate in a fashion that enhances environmental sustainability; a manner that creates an enabling ecosystem. And in this regard, Tesla Motors Inc (NASDAQ:TSLA) is perfectly positioned.

Aren’t Tesla’s peers working on green solutions too?

Although Tesla Motors Inc (NASDAQ:TSLA) seems to be well positioned with regard to green solutions, its peers are not holding back and in fact want to match, if not outmatch, Tesla Motors Inc (NASDAQ:TSLA)’s progress.

In light of General Motor’s renewed stance on electric vehicles and renewable energy, it is partnering with TimberRock Energy Solutions, a Maryland-based company that produces solar charging canopies for charging stations. Through the partnership, the two will be able to regulate the amount of renewable energy used by GM’s electric vehicles. TimberRock is set on delivering only essential energy to electric vehicles. This essentially means that electric vehicles will be able to store unused energy that can later be supplied back to the grid and sold by TimberRock.

The joint project will make use of General Motor’s OnStar technology, which has a tool called Demand Response that communicates real-time information to TimberRock. The latter can then use the information to identify volts within GM’s electric vehicles that have surplus energy to be supplied back to the grid. If this technology becomes commercially available, there is no denying that it could be a game changer.

Toyota Motor Corporation (ADR) (NYSE:TM) is also working on electric vehicles that not only present green solutions but provide convenience as well. The Japanese automaker is working on the iRoad, an automobile that is neither a car nor a bike, but rather a blend of the two. This 3-wheeled machine can accommodate two people at a time and will be powered by a pair of 2kW electric motors that can deliver up to 30 miles on a single charge. Apart from presenting green solutions, the iRoad will save parking space by allowing cars to fit into small spaces in crowded urban areas. Again, the iRoad could be a game changer, especially in China where demand for electric vehicles has gone through the roof. If Toyota Motor Corporation (ADR) (NYSE:TM) makes the iRoad commercially available in the southern China region, where China’s anti-Japan sentiment is less profound, it can record meaningful sales.

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