The new face of investments
Against the backdrop of contemporary investing, new investment patterns are emerging; patterns that will arguably shape the investment space over the next century. There is a progressive shift toward integrating investing with environmental, sustainability and governance factors, or what experts commonly refer to as ESG factors. This shift is not exactly because investors are ‘good people’ with noble causes, but because more and more investors understand the impact that ESG factors have on investments.
In reference to an article authored by Alyce Lomax, it has come out that climate-related threats are material financial issues that could have catastrophic outcomes on companies’ revenues and profits. Lomax picks out the example of Hurricane Sandy and pairs it to the drought that plagued the U.S in the past year. Collectively, these two infamous forces of nature resulted in insured losses of up to $58 billion. In view of this, investors are looking to invest in companies that not only present favorable growth and income prospects, but that also operate in a fashion that enhances environmental sustainability; a manner that creates an enabling ecosystem. And in this regard, Tesla Motors Inc (NASDAQ:TSLA) is perfectly positioned.
Aren’t Tesla’s peers working on green solutions too?
Although Tesla Motors Inc (NASDAQ:TSLA) seems to be well positioned with regard to green solutions, its peers are not holding back and in fact want to match, if not outmatch, Tesla Motors Inc (NASDAQ:TSLA)’s progress.
In light of General Motor’s renewed stance on electric vehicles and renewable energy, it is partnering with TimberRock Energy Solutions, a Maryland-based company that produces solar charging canopies for charging stations. Through the partnership, the two will be able to regulate the amount of renewable energy used by GM’s electric vehicles. TimberRock is set on delivering only essential energy to electric vehicles. This essentially means that electric vehicles will be able to store unused energy that can later be supplied back to the grid and sold by TimberRock.
The joint project will make use of General Motor’s OnStar technology, which has a tool called Demand Response that communicates real-time information to TimberRock. The latter can then use the information to identify volts within GM’s electric vehicles that have surplus energy to be supplied back to the grid. If this technology becomes commercially available, there is no denying that it could be a game changer.
Toyota Motor Corporation (ADR) (NYSE:TM) is also working on electric vehicles that not only present green solutions but provide convenience as well. The Japanese automaker is working on the iRoad, an automobile that is neither a car nor a bike, but rather a blend of the two. This 3-wheeled machine can accommodate two people at a time and will be powered by a pair of 2kW electric motors that can deliver up to 30 miles on a single charge. Apart from presenting green solutions, the iRoad will save parking space by allowing cars to fit into small spaces in crowded urban areas. Again, the iRoad could be a game changer, especially in China where demand for electric vehicles has gone through the roof. If Toyota Motor Corporation (ADR) (NYSE:TM) makes the iRoad commercially available in the southern China region, where China’s anti-Japan sentiment is less profound, it can record meaningful sales.
Tesla, however, has the edge
From a strict business standpoint, advanced technology is an irrefutable edge for any company. However, business acumen is more important as it transforms amazing technology into actual sales. In relation to this, Tesla Motors Inc (NASDAQ:TSLA) is working on building its brand and enhancing customer experience. For starters, it has introduced flexible payment programs that don’t exactly reduce the price points and bungle the luxury stance, but enhance convenient payments. The factory-owned dealerships and TeslaMotorClub.com, a site dedicated to sharing insights on the brand, are also key catalysts for brand loyalty. Again from a strict business standpoint, this is what will make the difference when it comes to purchasing decisions.
Conclusion
Going by the global shift toward integrating investing with ESG factors, there is no denying that there will be reinvigorated interest in companies that present green solutions. Looking at Tesla’s technology and tactful business approach, there is no denying that this is a company that’s not only consistent with investors’ push for sustainable and environmental friendly solutions, but that also has the clout to bring in huge sales in the long run.
Despite the rally that has brought every investor to the edge of their seats with anticipation, anxiety and suspense, Tesla Motors Inc (NASDAQ:TSLA) still makes a compelling case for the long-term buy-and-hold investor. It is case where long term prospects overshadow valuation concerns.
The article Tesla’s Long-Term Prospects Overshadow Valuation Concerns originally appeared on Fool.com and is written by Lennox Yieke.
Lennox Yieke has no position in any stocks mentioned. The Motley Fool recommends General Motors and Tesla Motors (NASDAQ:TSLA). The Motley Fool owns shares of Tesla Motors. Lennox is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
