Some complain that Tesla Motors Inc (NASDAQ:TSLA) is trading too high, at a P/E of over 90. I beg to differ. Tesla has gotten nothing but great press lately, and why shouldn’t they? A 99 out of a 100 by Consumer Reports, AND Motor Trend’s Car of the Year, I mean wow! People are raving about the performance and beauty of this car, so what was that last point out of a hundred? Battery charging and range.
Musk The Magnificent
Well good thing Elon Musk, being the genius he is, knew that this was going to happen and decided to build in the possible battery swapping technology in every single Model S, even the ones built before anyone even knew Elon had been thinking about coming out with battery swapping. So what does Consumer Reports have to say now?
My guess is that Tesla Motors Inc (NASDAQ:TSLA) will keep most of its charging stations with just the super chargers, while upgrading the ones on interstates to have the battery swapping ability as well. This allows drivers of Tesla’s to fill up their battery (swap) faster than someone could fill up their tank of gas. This confirms Elon Musk’s tweet over a month ago saying that soon Tesla Motors Inc (NASDAQ:TSLA) drivers will be able to fill up their battery faster than ICE’s can fill up their gas tank. I was slightly misled, thinking that when Tesla announced beta testing for superchargers, decreasing full charge time from 1 hour to 20 minutes, that’s what he meant by the super-fast charge time. But of course Elon Musk comes in with a surprise.
Beware the Giants
Its true Tesla Motors Inc (NASDAQ:TSLA) needs everything to go right for it for the valuation to hold true. Ford Motor Company (NYSE:F), Nissan, and General Motors Company (NYSE:GM) all have respective electric vehicles, but let’s take a look at those. Ford has the Ford Focus Electric that goes about 76 miles in a charge, Nissan has the Nissan Leaf that goes about 75 miles, and Chevy has the Volt that goes about 30 miles before switching to an ICE. These also don’t have either supercharging capabilities, or battery swapping capabilities. Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Nissan all are well established automotive manufacturers who seem to be sticking to their roots. With a solid P/E of 10, Ford seems like a good investment for the 60 year old investor looking for a nice dividend on a safe stock. Tesla Motors Inc (NASDAQ:TSLA) isn’t a safe stock, and that’s what makes it so sexy.
If we can’t even compare the vehicles produced between Tesla and Ford, Chevy, and Nissan, why are we comparing their share prices and P/E? It’s like comparing an iPhone to a walkie-talkie. Actually wait, it’s like comparing a Tesla to Ford– that seems about right. Tesla is on a whole new plane, and everyone shorting Tesla Motors because its P/E is way off course from the average automotive company is in for a rude awakening, because guess what, Tesla isn’t the average automotive company.
Battery swapping technology that is being released to the public on June 6 is the last piece of a perfect vehicle. It enables quick charging for road trips, and eliminates any doubt that the Model S is literally the perfect car. I cannot wait until Tesla Motors Inc (NASDAQ:TSLA) comes out with their Gen III. If it’s anything like the current vehicles being produced, Tesla won’t have any issue maximizing the half a million a year production potential of their Fremont manufacturing plant.
And for the recall of a few Model S: The fact that Tesla found this defect, (not regulators and not customers) shows just how tentative the engineers and designers are at that produce these automobiles. If anything, this finding should be impressive, and let customers know that they really are safe in the hands of Musk.
Joel Wasserman owns shares of Tesla Motors Inc (NASDAQ:TSLA). The Motley Fool recommends Ford, General Motors, and Tesla Motors . The Motley Fool owns shares of Ford and Tesla Motors. Joel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article The Last Straw for Tesla Motors originally appeared on Fool.com and is written by Joel Wasserman.
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