Tesla Stock Soars After It's Called 'America's Fourth Automaker'

UPDATE: Tesla stocks closed at $27.75 on Thursday, a 2.7 % decrease from a daytime high of $28.51, but up 17 percent from Wednesday.

Ford, General Motors, Chrysler and Tesla?

A new report by Morgan Stanley suggests that electric car startup Tesla is in good position to break into the Big Three to become "America's fourth automaker." The brokerage believes that increasing gas prices and promises of governmental support for alternative fuel vehicles may help launch the manufacturer to global success.

Tesla's stock rose 20 percent following the report, to $28.51, but the firm's price target for the end of the year is $70, about double its current price.

Not everyone is quite so optimistic, however. Though Morgan Stanley's report estimates that electric cars will reach 7 percent of total U.S. car sales by 2020, previous estimates have placed that figure closer to 1 or 2 percent.

"I'd say that the praise is a little bit of a hyperbole," said Ed Kim, director of industry analysis with AutoPacific. "In fact more than a little -- Tesla still has a long way to go before they become a true volume automaker in North America."

Major obstacles still confront the electric vehicle industry from reaching widespread adoption. Unlike gasoline-run cars, or even hybrids, pure electric cars require significant infrastructure to be at all viable outside of urban areas where driving distances tends to be shorter.

Ultimately, though, experts believe EV adoption will come down to price: if gas prices continue to rise, and the government actually steps in to provide major subsidies on electric vehicle purchase, American consumers may come to regard the cars as worthwhile investments.

"As long as we're still in a world where we don't have a vastly expanded infrastructure, in a world where gasoline is still cheap enough, the mainstream is not going to embrace them," said Kim. "Consumer behavior is affected first and foremost by price."

Watch a short video about Tesla below by AOL Autos:

PRODUCTION PLAYER! DO NOT DELETE.

Comments

[sking007]

03:40 PM on 05/03/2011

I completely disagree with the authors assessment regarding the adoption of electric cars. The real issue is not acceptance but rather the lack of political will. There are many powerful and competing interest at work here. If this country was serious about electric cars it would create one that is more affordable to the average buyer. The fact, the government subsidizes on both ends, one directly to the auto development coffers and again for the rebate on the purchase makes me wonder who is really benefiting? If you really want to see consumer excitement with electric cars just wait until China begins to dump their electric cars on the market. Then you'll see just how unprepared US and Japan auto makers are. And watch, they'll respond no less to the challenge than driving the Washington beltway with big oil lobbyists in tow looking for yet another hand-out.

[brux]

01:52 AM on 04/19/2011

I love the idea ... I don't think the reality is here.
In fact I don't want to have to pay more for a car that might make my money back saving me gas. I don't like the whole way things that are green are marketed ... companies are not being real when they make people pay for the privelege of doing the right thing ... we want to motivate people to be green by making the products save money ... and really the only way that is going to happen is if the cost of all the bad stuff is added in to the price of the bad stuff.

[laterthanyouthink]

07:56 AM on 04/04/2011

I guess now is a bad time to suggest a nuclear powered electric car ...

[Jon Mendoza]

04:31 PM on 04/03/2011

I wish a viable solar car manufacturer would come out just to give a huge middle finger to the oil companies.

[laterthanyouthink]

07:39 AM on 04/04/2011

Go for it!

Find some engineers and automobile designers and MBA's and put together a business plan, write some government grants, raise money ...
You don't need permission from anyone.
You don't need a license.
You don't need any degrees.

This is the land of the free and the home of the brave.

Just do it!!!!!

I'm rooting for you.

[apeweek]

02:12 PM on 04/17/2011

Solar is not so hard. You can put a solar panel on your garage to charge your EV for as little as a couple thousand dollars.

You don't even need to spend mega-thousands for a Volt or Leaf. EV hobbyists convert cars to electric all the time for very reasonable money. You can convert one yourself, or buy a hobbyists' car.

[Yotta]

12:41 PM on 04/03/2011

Plug-in hybrids are the next logical transitional vehicles to produce considering the lack of recharge infrastructure.

[Steve Albin]

10:21 AM on 04/03/2011

What a joke so far, Tesla has only proven adept at making big promises.Look at the numbers S-1 filings In the first quarter of the year, Tesla sold a total of 126 cars, according to a four-digit subtraction equation (with borrowing) undertaken by editors at Greentech Media. At the end of 2009, the company had cumulatively sold 937 cars, according to the initial S-1 filing, a prelude to an initial public offering, filed in March. In the amended S-1 filed June 15, the company said it had sold a total of 1,063 production cars to customers since the start of the company through March 31, 2010. 1,063 minus 937 comes to 126 cars sold in the first quarter of 2010. With thirteen weeks in the first quarter, that comes to 9.7 cars sold a week at a cost to make of over $250,000 Note that these are only sales figures for the Tesla Roadster, which costs a prohibitive $109,000. And 3,940 customers have already put down $5,000 deposits for the Model S sedan, set to be released in 2012.A lot less than the 2,000,000 cars that are needed to be sold to be the 4th largest USA car maker

[Steven Travis]

01:21 PM on 04/03/2011

Hey there Steve - stop posting facts .... people here don't like facts, they would much rather wax poetic about stuff they know nothing about.

And yes, I agree Tesla and all these other tertiary car makers are a joke - and if you have ever seen the specifications they deliver to their suppliers (and compare them to what the real auto makers like the GM/Ford/Chrysler/BMW/Audi folks deliver) you would realize just how MUCH of a joke they are.

[Ppfffftt]

05:31 PM on 04/03/2011

Is Tesla really the joke? Because judging by what you said, they're an up and coming company, struggling to make it. If there's a joke, it's Morgan Stanley.

Nothing you said makes Tesla's technology any less important; their cars any less valid. Here's hoping they make it.

[brux]

01:57 AM on 04/19/2011

Yeah, the fact may show they are not there yet, but you cannot blame them for trying. Some of the ideas are good, but I have to admit, I live about 2 miles from their showroom, and those things are really tiny. I would not really want one, but if I could just throw away $100K on my green image - that would be nice.

[Peter Boehringer]

08:32 PM on 04/02/2011

Tesla may be a great car and a great company. But I wouldn't trust Morgan Stanley. Seems like their blowing their own trumpet pretty hard.

[LALC]

07:39 PM on 04/02/2011

I think that gasoline hybrids are the way to go right now (whether self-charging battery or electric plug-in). The technology is there & esp works for those that do "general" driving, ie work commute, store, mall, school, movies.... They can cut gasoline usage nearly in half. So, you can commute with no fear of "running out" of electricity.

[Minion]

03:58 PM on 04/02/2011

Keep up the great work! Sincerely, John DeLorean

[pvbeachbum]

01:37 PM on 04/02/2011

telso is another company run by billionaires who are receiving huge gvernment subsidies to build these cars which are expensive (and will continue to be), difficult to maintain because of the battery cost and its shelf life, and the dependence on "premium" oil. sorry everybody....electric cars are not "commuter" cars, when the average communting disance is 40-60 miles one way.the rich get rich, and poor get taken.... because they're "green."

[Ppfffftt]

06:17 PM on 04/03/2011

The future always sucks until it gets here.

[laterthanyouthink]

07:52 AM on 04/04/2011

Or vice versa ....

[xeric]

02:12 PM on 04/07/2011

Actually you need to read up on the specs of the Tesla Roadster. It gets 245 miles on a single charge (recharging takes about 4 hours) so even if you forgot to charge it one night you could still take a 60 mile commute each way for 2 days. This is also approximately the distance between Boston and New York City, not too shabby I think. This is far better than anyone else has done, and leaps over one of the biggest hurtles of mainstream EV acceptance.

Regarding it's stock price I'm pretty sure it's overvalued right now and $70 sounds pretty optimistic; like others I think Stanley Morgan is trying to help out their investment.

I think this is a very solid company in the long-term - they don't need to sell very many cars to make a name for themselves (which they've already done) and get where the real money is - licensing their technology out to other car makers (they've already struck a deal with Toyota to provide the electric drivetrain in their EV's). Their own cars will continue to be a luxury option for those with particularly deep pockets, but I think if they continue working with other car manufacturers and empowering their brand they can do quite well for themselves and help bright EVs into the mainstream.

[jmaxcourt3490]

12:47 PM on 04/02/2011

What needs to be done is a transition of some % of cars to natural gas. We have an abundance of it, cars actually run similar to gas powered vehicles. This would provide ample time to come up an alternative powered vehicle that works. I live in a rural area and commuting to work is a 60 mile adventure not to mention any other trips that are required, so an electric car won't cut it.

[Quanta]

01:05 PM on 04/02/2011

Tesla Roadster 245 miles on a full charge.
Tesla Model S 300 miles on a full charge.

[jmaxcourt3490]

01:37 PM on 04/02/2011

Very nice but my home mortgage is 500/month I don't think a higher priced car payment fits in the budget. If the price came down it would be great. How are they on snow covered roads in the mountains?

[Steven Travis]

03:04 PM on 04/02/2011

I believe those numbers are UP TO 245/300 miles.

Things that impact range of EV's.
- driving patten
- cold weather
- hot weather
- battery life (what stage of it's life is it in).

Assume that those numbers are about as valid as the MPG numbers on the sticker of your new car.

[TangledUp67]

01:35 PM on 04/02/2011

Watch Gasland. Then natural gas might not seem like such a great idea.

[jmaxcourt3490]

01:44 PM on 04/02/2011

The other side if you would like

http://www.commonwealthfoundation.org/policyblog/detail/gasland-debunked

[Grob Hahn]

12:39 PM on 04/02/2011

It's puzzling that the industry isn't trying to market a cheaper, commuter-class EV. We need a model priced below $20K to give this industry the jump-start it needs. Paying $50K for a vehicle like this is only cost-effective for a slim segment of the population. We need some Henry Ford kind of thinking on this issue.
Grobbbbbbbbbb

[Steven Travis]

03:08 PM on 04/02/2011

Battery packs are in the range of $15K-$25K. Not sure how you think you can get a whole vehicle for $20K (the closest so far is the Leaf at $33K minus any tax incentives).

[apeweek]

12:23 PM on 04/09/2011

Don't believe what you read about EV battery pricing. EV hobbyists can get lithium batteries (good ones, with up to a 30-year lifespan) for about $6000 per 100 miles of range. (Google the price of Thunder Sky EV lithium batteries.) These prices are steadily falling, too.

Auto companies mark these way, way up. A little cleverness (help from an EV hobbyist) could save you lots of money.

You can get an EV for under $10,000 by buying a homebuilt (converted) EV from a hobbyist. I drove one for years I found for just $2000 on eBay. (I drive a Chevy Volt now.)

[RudyHaugeneder]

11:59 AM on 04/02/2011

Give people the opportunity to by a mechanically sound electric car for around $5,000 (Telsa), and there will be a stampede to the dealerships selling them.

[dnaromney]

01:23 PM on 04/02/2011

You are never going to see a $5,000 price point for these vehicles, at least not in the foreseeable future. The battery alone currently costs many times that amount (~$35,000). With advances in technology, the cost will certainly come down but we don't have many gas-powered cars retailing for $5,000 or less.

[apeweek]

12:25 PM on 04/09/2011

You'll find a few $5000 EVs on this page:

http://www.evtradinpost.com/

[YoBear]

02:20 PM on 04/02/2011

Wishful thinking. The large price tag sported by the car does not include battery replacement. People don't buy Teslas to save money.

[keysoftheraw]

11:16 AM on 04/02/2011

I love how the underwriter of the IPO puts out a report about how they support the stock, and then the stocks prices goes up? Huge amounts of swag those Morgan analysts have, I hope the Goldman kids didn't tease them too much.

[mashtoe]

11:05 AM on 04/02/2011

We should have let Chinese automaker GM fail and invested in US automaker Tesla in a deal ensuring they remain a US only producer.

Bailing out GM was a direct subsidy to the communist Chinese from the US worker.

[Steven Travis]

11:44 AM on 04/02/2011

Your comments are indicative of how much of a joke you are.

[YoBear]

02:23 PM on 04/02/2011

Actually I agree with his assessment. It prudent to be cautious of anything the underwriter says. Morgan Stanley was a bif underwriter for a little company I worked for. I bought into the hype and didn't sell my stock. Needless to say our company never met MS's "expectations"

[YoBear]

02:25 PM on 04/02/2011

Yep, its not what you can build, it's who you know. Our government is merely a tool of the corporations. Not sure how we change that.