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5 reasons why Tesla will thrive

There exists a large population of investors that seems to be overly excited with any negative news regarding Tesla Motors (TSLA). From February 8, the day a New York Times writer bashed the Tesla Model S for its apparent lack of range, the stock promptly dropped nearly 4% in the two days following. After the February 20 earnings call [see transcript], during which the company announced earnings losses greater than expected, the stock price plummeted 12% over the next two days. Tesla’s stock seems to be a target for daily shorters, taking advantage of the fragility of the electric vehicle manufacturer. But I do not want to discuss Tesla’s day-to-day stock price. I’d rather dive into whether or not the company will survive over the long run and lead us into the next generation of travel.

Before I talk about why I believe Tesla will succeed I want to dismiss the primary argument of the non-believers and shorters.

The World is Not Ready

The primary argument against Tesla’s future success is that the world is not ready. This statement baffles me. What does that mean? I imagine a point at which “the world” decides at one point in time that it is ready for electric cars. Needless to say, there will not be a point at which the world decides it is ready, and then waits for an electric car to be manufactured. Without pioneer companies like Tesla, the point at which the world will be “ready” for an electric vehicle manufacturer would be when we run out of oil to put into our gasoline-powered cars.

According to a study by Deloitte, 54% of Americans are either considering being an early adopter in purchasing an electric car or might consider purchasing one at some point, and 78% of Americans said they would be more likely to purchase an electric vehicle if gas prices hit $5.00 (you may think that is unreasonable now, but in 1999, when a gallon cost just $1.17, you probably thought today’s price nearing $4.00 would be unrealistic).



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