The Tesla (NASDAQ:TSLA) car took the market by storm just at a time when the new models of both foreign and domestic automobiles failed to inspire a passionate buying response. Although new car sales increased significantly over the past years, the humdrum designs left the door open for the new Tesla to gain a solid toehold in the marketplace among those seeking to make a statement about themselves and their vision for the planet.
Tesla Motors was started in 2003 in Palo Alto, California by three Silicon Valley engineers who saw the public's move to more sustainable energies as an opportunity to provide a new way of driving. Their Tesla car would be fully electric with charging stations as commonplace as the gas stations we see today. They took their idea from concept to reality in a few years. Their X model quickly morphed into the S model, and the Roadster made heads turn to give the company instant street recognition.
Elon Musk is leading the company into the future with a variety of strategies designed to make Tesla the market choice for forward-thinking consumers with the funds to pay the $70,000 to make a statement about the direction of driving and energy consumption in the country's future
Tesla's Strategy for Market Acceptance
Tesla took a bold step with its marketing, providing access to vehicles and vehicle information at malls in California instead of along strips lined with other car dealers. This allowed people to familiarize themselves with the concept and the car in a friendly environment. Tesla quickly became the third most popular luxury car sold in California, and they expanded this familiarity to the national and global marketplace. They invested heavily in charging stations in both large and small markets, making it seem inevitable that their vehicles would be commonplace in due time.
Problems With the Tesla Car
The introduction of the new vehicle was not without its glitches. Problems with the GPS system were widely reported, and video of a Tesla vehicle battery fire hit the Internet with ferocity. CEO Elon Musk has done his utmost to calm fears about the video, but this development, along with fires in the Mitsubishi i-MiEV and Chevy's Volt, have put a dent in consumer confidence in the product.
Recently, Tesla announced the choice of AT&T to provide wireless service for its vehicles, hoping to attract the tech-savvy crowd to its market, with 2-way communication for stolen-vehicle location and roadside assistance, as well as Internet access, entertainment and navigation features. Updates for the system occur when the vehicle is recharging, offering customers increased convenience.
Whether this will be enough to stimulate what I consider a grossly overvalued stock is yet to be determined. However, Musk and his team at Tesla are sure to be focused on their market advantage in the months to come.
As a prudent investor and having recently driven this exciting car, I recommend that Tesla shareholders take some money off the table and buy the car this weekend.