Higher competition from price cuts
Electric-motor cars have a market share of 3.8% , up from 3.4% in 2012. Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) and General Motors Company (NYSE:GM) also increased their focus on making electric cars. Tesla Motors Inc (NASDAQ:TSLA)’s Model S is the most popular electric car and got a highest test score of 90 points out of total 100-point scale. Tesla’s Model S is extremely expensive, with a starting price of $69,900, compared to General Motors Company (NYSE:GM)’ price of $39,145 for the Volt and the Nissan Leaf with a price of $28,800.
Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) announced a price cut for its Leaf by $6,400. Its plant is manufacturing about 2,000 vehicles a month, while Nissan Canada will now offer lower-priced Leaf vehicles beginning next month. Due to eco-friendly actions and Leaf’s positive effect on perceptions of the brand, Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) has been now named the greenest brand in 2013.
General Motors Company (NYSE:GM) announced the reduction in Volt’s price by $4,000 in order to enhance sales, which could affect adversely on Tesla Motors Inc (NASDAQ:TSLA)’s sales. This is not only a price cut but rather an incentive by General Motors Company (NYSE:GM). Customers will be given a $4,000 discount if they buy the new 2013 model of the car, while a $5,000 discount is given to customers who decide to own the 2012 model.
As battery charging is an issue in electric cars, GM and BMW are now working on a technology that will charge 80% of an electric car battery in 20 minutes; the devices, which are designed for charging stations, will cost $20,000 to $30,000 each. GM will launch is the new electric Chevrolet Spark in 2014 and it will cost around $20,000, which will further increase the price war.
While Tesla is targeting a completely different target market with regards to income levels, still any price cuts by its competitors have an adverse impact on its sales. However, Tesla Motors Inc (NASDAQ:TSLA) still remains a top seller of electric cars with sales of 4,900 units of the Model S, beating General Motors Company (NYSE:GM)’ Chevrolet Volt, which had sales of 4,421 and Nissan’s Leaf, which had deliveries of 3,695.
Conclusion
Tesla Motors Inc (NASDAQ:TSLA) posted an unexpected result at the end of the first quarter of 2013. However, I highly doubt that the company will post another profitable quarter. Revenue will be down due to the expected decline in ZEV credits, while the 1Q bottom line was already supported by one-time items, which might not appear again. Therefore, I believe there are no significant positive catalysts that will lead the company to post another profitable quarter.
Red Chip has no position iny any stocks mentioned. The Motley Fool recommends General Motors Company (NYSE:GM) and Tesla Motors . The Motley Fool owns shares of Tesla Motors .
The article Pricing War Threatens Tesla’s Market Share originally appeared on Fool.com.
Red is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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