Tesla in Focus, Musk on 60 Minutes - Analyst Blog

Tesla Motors, Inc. TSLA has been in the news since stringent licensing regulations announced earlier this month by the New Jersey Motor Vehicle Commission (NJMVC) and members of Governor Christie's administration banned the direct sales of vehicles by any automaker and necessitated the use of middlemen. Thus, Tesla's sales will be restricted in New Jersey and its existing retail licenses will be cancelled.

Tesla alleged that the new regulation is adopted to protect the monopoly of a special interest group and is against free market operations. The laws will hinder the growth plans of Tesla in New Jersey which will not only mar its results but will also affect the customers' interest in the state.

On Sunday night, Tesla CEO Elon Musk provided highlights from the journey of Tesla Motors on 60 Minutes. Though Musk thought that Tesla will face several hurdles owing to high vehicle prices, the company is performing quite well.

Tesla offers its customers a relatively new technology which provides sustainable transportation. Electric vehicles offer more fuel efficiency and better emission standards compared to the gasoline counterpart. Although electric cars occupy a small portion of the global automobile market, Tesla has acquired substantial market share within this niche segment.

The company is witnessing growing sales due to the strong performance and impressive design of its products. Tesla expects to deliver over 35,000 vehicles globally in 2014, up 55% over 2013.  

Smart design with updated technology drives Tesla's vehicle demand. The Model S car received the government's highest safety rating and the highest quality rating in Consumer Reports history.

Other than Tesla, Musk's other business is SpaceX, which aims at producing rockets at affordable price.

Tesla faces considerable challenge in reducing vehicle price while maintaining battery quality. Thus, the automaker plans to construct Gigafactory to produce lithium ion batteries and expects to gain economies of scale and reduce production costs based on innovative manufacturing techniques, reduced logistic wastes, optimization of co-located processes and lower overhead costs. The Gigafactory will supply lithium-ion batteries to Tesla's Fremont, CA, assembly plant.

Recently, Tesla signed an agreement with New York State Automobile Dealers Association and the Greater New York Automobile Dealers Association. Under this deal, Tesla will be allowed to directly sell its vehicles without any dealer network in five retail locations in the state.

Tesla currently carries a Zacks Rank #2 (Buy).

Some other well-performing automobile stocks worth considering are Daimler AG (DDAIF), Tata Motors Ltd TTM and Toyota Motor Corp. TM. Daimler and Tata Motors carry a Zacks Rank #1 (Strong Buy) while Toyota carries the same Zacks Rank as Tesla.