Favorable Catalysts

The high price of gasoline in the U.S. and across the globe, coupled with stringent emissions regulations has fueled the demand for lower-emission vehicles.

Tesla Motors, with its focus on electric vehicles and production of advanced electric components for other electric vehicle manufacturers, is in an ideal position to capitalize from these developments. 

The Palo Alto, CA based company has received positive reviews for its flagship "Model S" vehicle, which retails starting at approximately $70,000.

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Sales data proves that this vehicle could provide a positive catalyst for revenues in the next few quarters.

Meanwhile, the company has continued to invest heavily in its "X" SUV, which is also expected to start contributing to the company's bottom line by Q2 2014. Its "Gen III" model, which is expected to retail at 50% of the price of a Model S, is scheduled for release within the next few years.


All these plans, if executed efficiently, are sure to add momentum to TSLA's market share growth, and provide the required catalyst for future revenue growth.

In another positive move for the company, Tesla Motors won a major legal victory in its battle to sell its vehicles directly to customers in North Carolina, bypassing its dealer network.

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By striking down a previous bill banning such a move, the North Carolina House of Representatives may have provided yet another positive catalyst to improve the company's margins by reducing dealer commissions and sales incentives.


As other manufacturers push out newer and better models of their own low-emission electric vehicles however, TSLA will face increasing competition and price pressure.

While Tesla still enjoys great profit margins, it will need to improve its operating margins as well.

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Failure to manufacture more innovative electric cars that are better and cheaper, and cost less than the competition, could seriously jeopardize the company's future.  

Another unknown factor that could seriously challenge TSLA's leadership position in producing green-friendly vehicles is California's Zero Emission Vehicle (ZEV) laws.

Under its 2013 ZEV Action Plan, the government plans to introduce new changes to how the law is implemented. Such changes could have far reaching consequences for TSLA's future revenues.

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Under current ZEV legislation, individuals purchasing an electric vehicle (such as the Tesla Model S) receive a healthy $7,500 tax credit. The Gartner Group estimates that this subsidy contributes approximately $250M to Tesla Motors' coffers.

Any changes to ZEV legislation that restricts this windfall could seriously impact the company's revenue projections.