Tesla Motors Inc (TSLA) Can Dominate This Market

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Making a small car for Tesla that could start in the $30,000 range would probably be ideal. Tesla CEO Elon Musk has stood by the fact that Tesla cars have incredible resale value, and to be able to do the same in the compact class of cars would be a great selling point for consumers.

A Battle Could Ensue


Ford and GM aren’t going to sit around and let Tesla take a share of their small-car market. They are going to put up a fight. Ford is releasing the C-MAX this year, a hybrid model that appears to be taking on the Toyota Prius. GM has the electric Volt, but has been struggling to sell it in volumes. GM needs to lower the Volt’s $38,000 price point in order to make it viable to potential customers who are probably the type that buy small cars.

Bottom line: Don’t count the incumbents out. GM offers good value now that the company has been restructured. It is even rejoining the S&P 500, a testament to its rebound from 2009. Ford offers good value as well, but it seems to be overly focused on trucks in the United States, which could be considered a concern given that the market for trucks is a high-margin yet dwindling-volume business.

As you can see from the chart above, auto sales are rebounding from the recession. Now is a great time to invest in automakers, and Tesla is a great stock to be in for the long haul. Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk just purchased $45 million more in Tesla stock himself. That’s a sign that smart investors should move money into a company with an enormous ceiling.

The article An Untapped Market That Tesla Could Dominate originally appeared on Fool.com and is written by Daniel Cawrey.

Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Tesla Motors . The Motley Fool owns shares of Ford and Tesla Motors. Daniel 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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