Case Study Of Tesla

Business Strategy

Tesla´s long-term strategic goal is to create affordable mass market electric vehicles (EV) In order to achieve that goal it will increase the number and variety of EVs available to mainstream consumers in 3 ways:
 Selling its own vehicles in a growing number of company-owned showrooms and online
 Selling patented electric powertrain components to other auto manufacturers so that they may get their own Evs to customers sooner. As a result it has partnered with Toyota and Mercedes in order to supply batteries and charging systems
 Serving as a catalyst and positive example to others automakers, demonstrating that there is pent-up consumer demand for vehicles that are both high-performance and efficient

“On June 12, 2014,

Tesla is expected to focus on a continued push in Europe, and other emerging markets, especially Asia. Tesla is planning to install 30 more service and sales locations across Europe. It intends to construct a plant in Europe once its electric cars achieve the sales target of 160,000 units annually in the region. The auto maker also intends to launch a R&D centre in the UK within the next two years and expand its final assembly factory in Netherlands. In the Asian market too, Tesla intends to raise sales of its Model S by expanding sales to the Chinese markets China is a key target geography for Tesla, considering the fact that the pollution levels in Chinese cities are among the highest. Tesla is poised to invest hundreds of millions of dollars in China helped by various government incentives and has already implemented customization of vehicle interiors to suit local preferences as a step towards the same

The company is just one more example of the power behind herd mentality, demonstrating that sentiment is the true driver behind the price of its stock. Despite Tesla's strength, traders continue to doubt the company's prospects, with more than a quarter of the stock's float made up by short interest. This pent-up energy may be the perfect catalyst to help propel Tesla to new highs later this year.
Over the last 4 years, stocks of Tesla have grown by more than 1000%, despite posting negative profits. This can be largely attributed to the massive success of Tesla’s Model S, the delivery of which started in June 2012 as the perceived future potential of the company. Tesla revenues grew by more than 400% in the year 2013. The journey however has not been smooth sailing for the company with news of the car catching fire on a couple of instances.
Fundamentally, Tesla is a common target of criticism. Free cash flow, net income and operating margins are all shrinking, which is a legitimate concern. However, sales have been steadily exploding and appetite for Tesla's vehicles continues to expand both domestically and abroad. Ultimately, what speculators and investors are really concerned with is future growth, and it shows, reflected by a forward P/E ratio of nearly