Tesla Motors Inc (TSLA) Rally Far From Over: The Next Apple Inc. (AAPL)?

Although Apple Inc. (NASDAQ:AAPL) and Tesla Motors Inc (NASDAQ:TSLA) are worlds apart, they have many things in common. They both boldly stand out for adding that touch of innovation to what their peers deem to be business as usual. Apple Inc. (NASDAQ:AAPL) successfully brought the whole concept of smartphones to the consumer market, and in addition to that, worked up a cool brand that necessitated a premium price.

Tesla Motors Inc (NASDAQ:TSLA)

Although Samsung has, in some ways, managed to chip away at Apple Inc. (NASDAQ:AAPL), the latter still rakes in unbelievable profits and remains a force to reckon with as far as smartphones go. A recent comScore study shows that Apple Inc. (NASDAQ:AAPL) is still the top smartphone in the U.S. with a 39.2% market share compared with Samsung’s 22%.

Apple Inc. (NASDAQ:AAPL) still remains king despite being at the center stage of negative outlook from industry specialists. If anything, this suggests the formidable strength of the brand that is Apple Inc. (NASDAQ:AAPL). From my assessment, Tesla Motors Inc (NASDAQ:TSLA) is slowly following in the footsteps of Apple. Although it is not producing smartphones any time soon, it is working up a strong brand for its electric cars — incredibly strong if I may add.

Another indicator is the rally that has characterized its stock in the past year. Just as I had forecast in a mid May article, Tesla Motors Inc (NASDAQ:TSLA) was bound to go past the $100 mark. At the time, it was trading at around $50. Now however, it has hit highs of $114 and, as of this writing, is trading intimately close to $100. This trend is very reminiscent of Apple at the time when the iPhone craze caught the market.

Tesla Motors Inc (NASDAQ:TSLA)’s rally has not fully played out. There is more hurt coming for the short sellers and if anything, this is merely the tip of the iceberg. Tesla Motors Inc (NASDAQ:TSLA) could become the next Apple, or perhaps even bigger. Here is why.

Incredibly strong brand means customer retention

One key differentiating factor that Tesla Motors Inc (NASDAQ:TSLA) has relative to its peers is its emphatic stance on strengthening its brand. It knows that building brand goes way beyond fancy commercials. The electric car upstart has taken up an active role in engaging its customers. This is well illustrated through the viral growth of TeslaMotorsClub.com, a site dedicated to hosting discussions on Tesla’s luxury electric cars. Here, customers have the chance to freely engage and thrash out ways to improve the Tesla experience. Because of this active involvement of customers, brand loyalty has soared incredibly.

Tesla has also removed typical dealership franchises to make way for its factory-owned dealerships. These company-owned dealerships will be the primary point of contact with customers. Although the move attracted litigation in some states across the U.S., Tesla remains unmoved.

This similar approach has worked well for Apple, with its Apple stores bagging accolades on several occasions for being the highest grossing retail outlets in the U.S. I believe that a similar approach will also work well for Tesla. And more importantly, it will tone up Tesla’s already strong brand by enhancing customer loyalty.

With a strong brand, Tesla will be able to retain customers like superglue. What’s more, with a little incentive, it will be able to grow its customer base. In view of this, Tesla has already revealed that its Gen 3 model, expected to roll out over the next three to four years, will be 50% cheaper than the already successful Model S. This lower price point, coupled with the existing flexible payment plans floated by company CEO Elon Musk, will act as a great incentive to rope in more customers to the luxury brand.

Tesla leads, others ‘copy’

Innovative companies always bring new meaning to the popular mantra ‘lead and let others follow.’ Instead, the catchword morphs to something like ‘lead and let others copy.’ Apple’s past legal brawls with Samsung puts a breath of life into this little theory of mine.

The rounded edges, the home button, the icons, the coolness; there is no denying that this was all Apple. How come I can see it on my Samsung Galaxy? While the courts can best decide who copied who, the general public tends to believe that Samsung was on the wrong.

Something similar is happening to Tesla, though on a smaller scale. Hundreds of kilometers away in the east, Toyota Motor Corporation (ADR) (NYSE:TM) has added an interesting addition to its product pipeline. Introducing the iRoad; unlike Toyota Motor Corporation (ADR) (NYSE:TM)’s typical line of automobiles, this product will be a hybrid of a car and a motorbike.

The iRoad will be powered by 2 kw electric motors that will allow the automobile to cover up to 30 miles on a single charge. In addition, the iRoad is touted to save parking space. Although this automobile doesn’t make the cut as a luxury brand, it is candidly working on a similar selling point as Tesla; green energy and convenience.

Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) have also in the past made notable moves to come out as more innovative. Both the bigwigs are in the process of developing app ecosystems for their cars that will ride on the whole ‘smartcar’ revolution that is progressively sweeping through.


Tesla is definitely making insurmountable inroads. Its growing brand is a reflection of the bright prospects that lie ahead. In the first quarter, its Model S came out ahead of luxury brands like BMW and Mercedes in the ‘luxury segment’ U.S sales, outperforming the BMW and Mercedes-Benz S-Class. Going by the company’s strong cash position, new found profitability, promising product line up, and strong brand, I can comfortably contend that the rally has not fully played out. It’s not too late to late to get onto this ship; greater gains lie ahead.

The article Tesla Rally Far From Over: Is This the Next Apple? originally appeared on Fool.com.

Lennox Yieke has no position in any stocks mentioned. The Motley Fool recommends Apple and Tesla Motors . The Motley Fool owns shares of Apple and Tesla Motors. Lennox is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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