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For the second time this year, General Motors (NYSE:GM) will be temporarily closing its plant that is responsible for building the company's electric car, the Chevrolet Volt. The company cited weak demand as the reason for the closure, and the share price for Tesla (NASDAQ:TSLA) fell by 4% in a reaction to this development.

The plant in Michigan will be closed down for an unspecified amount of time (some websites mention four weeks) as the company hopes to reduce some of its inventory during this time. In the first half of the year, GM was only able to sell around 10,000 Volt cars in the U.S. While this is up nearly 300% compared to last year, the company is still far from meeting its yearly goal. For the full year, the company hopes to sell 45,000 of these cars in the country and 60,000 globally. If the Volt doesn't meet the sales expectations this year, it will be the second year in a row where the car failed to meet the expectations. GM is said to have 6,500 Volts in stock, enough to supply the dealers for 84 days.

Should Tesla investors worry because of the low demand the Volt is facing? Well, Tesla has a very different target audience than the Volt. The target audience for the Volt is mostly those that want to save money on gas over a long period of time. The target audience of Tesla's cars will not really be too concerned about costs, as these cars are not necessarily designed to save money. Tesla's luxury cars target wealthier people and they have a much a larger profit margin than the Volt. Tesla will have to sell fewer of its cars to stay more profitable than GM.

In fact, the current problem with Tesla is supply rather than demand. The company received a large number of reservations and it will have to ramp up production in order to meet the demand in the short term. Tesla hopes to deliver 5,000 cars this year and 20,000 next year. In other words, the company will have to produce about 15 cars per day this year and 60 cars per day next year.

While Tesla doesn't have the same issues and problems as the Volt, it still has its own issues and problems. If the cars are not delivered in a timely manner, people might grow tired of the situation and start canceling their reservations. So far the company has delivered less than 100 cars, whereas there are more than 12,000 reservations to fulfill.

Tesla's CEO Elon Musk has a positive reputation because of his successes in companies like PayPal. Many investors have a lot of confidence in him. Musk also has a huge incentive to be successful as his stock options can possibly earn him billions of dollars.

On a side note, Tesla's current line of cars will be its final chance. Initially, the company's Roadster didn't prove to be very profitable, and the company's future depends on its performance in this year and the next. Tesla's situation is very similar to Nokia's (NYSE:NOK), which is burning through cash and relying heavily on its 2013 line of products to return to profitability and survive.

From here Tesla can either prosper and become the next Apple (NASDAQ:AAPL), or it will be history. If the company is successful in the short term, its market value can easily double or even triple. However, if it is not successful quickly, its very survival will come into question.

In the last quarter, Tesla lost 89 cents per share, beating analyst estimates of a 94-cent loss. The company's revenue totaled only $26.7 million because of the small number of cars it was able to deliver. The analysts covering the company don't expect it to be profitable until 2014. The analysts expect Tesla to lose $3.11 this year and break even in 2013. The company is expected to start profiting in 2014, and its earnings are expected to increase sharply after that.

Currently, I'm not invested in Tesla. I am still sitting in the sidelines. If the company's cash bleeding comes to an halt or a slowdown, I may initiate a long position -- but that might not happen for at least another year. If the company can successfully ramp up production and meet the brand, it will become a strong "buy."

Disclosure: I am long AAPL, NOK, GM. 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.

Source: Tesla Falls As General Motors Announces Weak Demand For Volt