Where Is Tesla's Growth Strategy? Bernstein Still Doesn't Know

"Dude, where's my car…and your growth strategy?" Bernstein quipped in a note regarding Tesla Motors Inc TSLA.

While Tesla is up roughly 20 percent in the last year, and about 34 percent in the last month, the year-to-date portrait shows a bit more volatility, as the stock is down almost 6 percent since January 1 thanks to a significant plummet early February.

In an intense note, Bernstein's Michael Parker and Mark Newman "blast" Tesla's strategy ahead of the Model 3 unveil event slated for late this month.

"It is very likely that the prestige, engineering and visceral thrill of German motoring has dissuaded many people from buying a Tesla Model S over the last few years. But if you agree with that statement do you also agree with the statement: 'It is very likely that the prestige, engineering and visceral thrill of Japanese motoring will dissuade many people from buying a Tesla Model 3 over the next few years'? [emphasis omitted]."

Auto OEMs

Parker and Newman spoke directly regarding the auto industry, OEM and how Tesla fits into the broader picture against a backdrop of unique clientele.

"To date, it has made sense – with Tesla making expensive, impractical cars that few people could afford and Nissan making EVs few people wanted to buy – for auto makers to dismiss the whole notion of EVs," the note said. "Yet with oil prices having collapsed ~65 percent, Tesla still increased vehicle sales by 50 percent in 2015, and BMW exited 2015 with electric vehicles representing 9 percent of its North America branded passenger vehicle sales. The challenge of EVs to incumbent OEMs is starting to look a little more imposing."

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The analysts continued, suggesting it appears other automakers are under the impression that "this new technology simply goes away," despite all the evidence to the contrary.

Due to this environment, Parker and Newman call for a rally to arms, specifically for battleground strategy: "This need for a coherent growth strategy from the incumbents is what will ultimately drive the transition of the auto fleet over the next decade to electric […] But ultimately the (Tesla) management team of a publicly-traded, consumer-focused company has to have a growth story [emphasis omitted]."

The Time Is Now

Bernstein analysts are optimistic that Tesla is on to something, but reiterate constantly that knowing vaguely what all the puzzle pieces are does not a complete picture make.

Tesla's thesis is strong, Parker and Newman feel, but that does not promise without a doubt superb results: "Cheaper, cleaner, faster, more convenient, more reliable technologies – that do not require the extinction of the species as part of their terms of use – win. Everything else is just a debate about timing."

"And that particular clock starts running in 13 days' time."

Parker added an extensive personal vignette about the "disruptive effect" of energy into the technology sector, concluding, "The only breakthrough that Tesla has made to date is the realization that it is smarter to put $35,000 worth of batteries into a $70,000 car than it is to put $35,000 worth of batteries into a $30,000 car. The only important questions right now are: ‘how does all of this change things?' and ‘what comes next?'

"The answers, respectively, are: fundamentally, and we are not entirely sure yet."