Tesla Motors Inc (TSLA): Should You Buy This Best-Case Auto Scenario?

I often wonder if investors even realize that the Chevrolet Volt sold over 7,000 units in the first five months of 2013. Hence, the Volt is not too far behind the Model S. Yet, we celebrate Tesla, while General Motors trades at 0.3 times sales.

General Motors Company (NYSE:GM) is cheap, and it has a lot of catalysts into the second half of this year. On Tuesday, General Motors announced that global sales rose 4% year over year, despite sluggish sales in Europe. Moreover, General Motors is expected to announce a dividend later this year, as the government slowly but surely removes its investment in the company. This will serve as a catalyst.

Ford Motor Company (NYSE:F) is also attractive, trading at 0.47 times sales. Ford’s premium to General Motors Company (NYSE:GM) is most likely in response to its dividend of 2.3%. However, Ford is also growing fast, increasing year-over-year revenue 10% last quarter alone. Therefore, at 10 times next year’s earnings, Ford Motor Company (NYSE:F) looks to be a good investment, much more attractive than Tesla Motors Inc (NASDAQ:TSLA)’s 133 times next year’s earnings.

Conclusion

Tesla Motors Inc (NASDAQ:TSLA)’s best-case scenario is still expensive compared to Ford and General Motors’ current valuation. Investors must remember that auto sales are expected to continue growing over the next seven years.

While electric vehicle growth is expected to outpace gas-powered automobiles, keep in mind that General Motors Company (NYSE:GM) is already in the electric vehicle market, and Ford Motor Company (NYSE:F) is expected to make its entrance. Therefore, if I were seeking an investment in the industry, I would much prefer a cheaper General Motors or Ford, and would not rely on a best-case scenario for Tesla to produce gains.

The article Should You Buy This Best-Case Auto Scenario? originally appeared on Fool.com and is written by Sherrie Stone.

Sherrie Stone has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors Company (NYSE:GM), and Tesla Motors Inc (NASDAQ:TSLA). The Motley Fool owns shares of Ford Motor Company (NYSE:F) and Tesla Motors Inc (NASDAQ:TSLA). Sherrie 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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