Tesla: New Features And Upcoming Catalysts

Feb. 7.13 | About: Tesla Motors (TSLA)

Tesla Motors (NASDAQ:TSLA) is a rare company - the last successful mass production car maker was established 100 years ago. The current car manufacturers are struggling with the economy and trying to stay afloat with the bad European economy. Take all of these things that those big automakers do and Tesla does them differently. Tesla currently is slated to produce about 20,000 cars this year of its Model S. The next Model, the Model X, should be available next year and the Gen III the year after that. They will all be built on the same chassis so that production ramp of the next two vehicles will be simple compared to the model S.

Tesla Motors makes the car experience very user friendly and utilizes every piece of technology that is available to the owners of its Model S. Imagine having an issue with the car such as not being able to "creep" forward at a stoplight. Now if this feature was not available in most vehicles, it would require a trip to the dealership to enable the feature if that was even possible. Tesla has an internet connection available through the Model S so that the only thing that needs to be done is to download an update. This is similar to an App that encounters a bug the developers just send out an update and it can be downloaded wirelessly. Speaking of Apps, Tesla Motors just announced that it has an App available for the Model S. The App is called "Tesla Model S" and is available in the Apple App store (NASDAQ:AAPL) and from Google Play (NASDAQ:GOOG).

The Tesla Model S App contains features that allow you to do everything from your smartphone. Important Model S features can be monitored and changed from your smartphone before you even leave the house. The release of this App so quickly means it will be available to all Model S owners going forward. This shows Tesla's commitment to the best technology for all of the cars that it produces in the future.

One issue with electric cars is the range and the amount of available charging stations. Tesla is in the process of putting up its own Super Charger stations currently on the west coast and east coast. Once again, Tesla does everything differently from other car manufacturers. Imagine if Toyota put up free gas stations throughout the countries that they sell cars. That would be impossible because of the high cost of gas and the fluctuations in price. With the Model S being an all electric vehicle, these Super Charger stations can be free to Model S owners and the stations will pay for themselves with solar panels generating the electricity.

The Model X, which is like the Model S but made into an SUV, should be in production by next year. According to unofficial tallies on the website, the Model X is already over 3,000 reservations with little advertising other than being a Tesla Motors product and the SUV only at a few auto shows. As the Model S picks up traction in the car world this will also generate increased interest in the Model X for people who do not want a car. These first two models will do all of the advertising necessary for the GEN III which will be the mass production vehicle. Any positive news on production for the Model X or the Gen III will send the stock soaring. The more reservations that come in will proportionally increase the price of the stock because every reservation means future earnings.

Tesla Motors has been on a tear recently with the stock up over 40% since the beginning of November. The stock is very volatile before and after it releases earnings which just happen to be coming up on Monday, February 11th. This would be a great time to get in if it drops after earnings because there are not many hurdles Tesla needs to overcome in the near future. The production rates for the Model S which were a concern 6 months ago have hit the target and they can produce 20,000 Model S vehicles a year without having to increase the production rate at all. The price of the Model S recently went up to those who ordered their vehicles after December 31st 2012. This could provide a boost to the earnings report with reservation holders all getting in before the year was over to save money. It created a sense of urgency and gave Tesla a lot more cash on hand with the required reservation down payments.

My old entry point for Tesla Motors(TSLA) was anything below $30 per share. It seemed to always spike back over $30 and only stay below that threshold for a couple of weeks. Going into the earnings report I would love to see a number between $35-33, which would be right at the 50MA. The stock is close to all-time highs and is a bit lofty to chase at this point.

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Going forward the newer model, the Model X will be built on the same platform that the current Model S is built on so production ramp of that model should not pose a problem. The European stores will be getting their Model S display cars in the next few months, according to Vice President George Blankenship. Another catalyst to look forward to is the opening in China in the spring. Tesla has one of the most technologically advanced factories in the car manufacturing world. A great look at the technology that goes into a Tesla factory is available from NatGeo Megafactories. The current factory is only at 20% capacity which provides plenty of room for two more models. With the new Tesla factory in Holland to handle the European production of the Model S, I would not be surprised to hear of a factory to serve Chinese and Asia demand. The benefit of increased reservations is interest free loans for Tesla which is why they will want to expand and obtain reservations as quickly as possible in new areas. As long as Tesla can continue to increase its reservations then the funding for the company will not be an issue going forward. Other car companies hold inventory on the car dealership lots but Tesla does not need to do that. They hold low inventory (just the car parts), and every car they build they have a buyer for.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.