A look at Elon Musk’s company and how it’s disrupting the carmaker business
There is no denying that Tesla Motors is a star company. Ever since announcing their first profit in the spring of 2013 it’s been a tale of constant new highs. They are still on the path to establish themselves in an industry that is over a century old, but their innovation and approach to challenges has captured the imagination of traders and clients alike.
Founded in 2003 by a group of five investors and engineers, taking its name from the electrical engineer/scientist/inventor/genius Nicola Tesla, the company set out to wane the world’s drivers of their dependence on fossil fuels. They would attempt to do this by providing a cost effective car that runs solely on electricity and has fewer components that need repair, meaning no fuel charges and less maintenance visits.
The most famous and crucial person among the founders is Elon Musk, a captivating figure whose ventures place him among the most influential CEO’s in today’s world. With a background in physics and business, he co-founded PayPal, later selling his share for a personal profit of $1.5 billion. Tesla is just one of the stars in the constellation of companies and projects he’s involved in. Among them are SpaceX, a company aiming to realise commercial spaceflight, and SolarCity, one of the largest companies in the US solar market.
Musk’s brilliance in business and marketing has allowed Tesla to become a unique company which is trying to disrupt the auto industry at all points, from production to the act of purchasing. The company has recently unveiled plans to build a “Gigafactory” in Nevada, multiplying the production of its car batteries, covering rising demand and profiting from economy of scale. Their network of charging stations, which many think was the game changer, continues to expand and keeps to Musk’s promise that “it’s use by Tesla owners’ would be free forever.”
Another innovation is their direct sales model, which lets clients buy the cars online and circumvent dealers, provoking discussion about the middle men’s role as a whole, but also forcing many states to ban Tesla unless they conform to the current sales structure.
All this has seen the stock rise exponentially from May, 2013 when they came out with a profit for the first time. Since then the stock has grown 360% and peaked at $291 earlier this year. In recent months there has been a pullback to $248 and investors are waiting to see if the stock is in a regular dip, or the pressure from state bans and wranglings with the dealer lobby will affect their plans for selling 100,000 cars by 2015.
Competitors have reacted to the challenge and GM and Nissan have managed to outsell the Tesla Model S two to one, but Musk and his company are still the guiding light in the area. They continue to attract investors’ attention with a valuation around 50% that of GM, with quite a small operation in comparison, and this might be signaling a momentum shift not only for the companies involved, but also for the way all of us travel.
Tesla Motors is available for trading in the Trading 212 PRO Platform.