Will Tesla's Batteries Outlast Headwinds?

Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Progress Report:  Ford (NYSE: F), mentioned 12/30/11 around $10.76 per share, currently trading around $12.60 per share (intraday, 3/21/12).

I really like the new Tesla (NASDAQ: TSLA), Model X. It looks like a car that could replace my dream car, the Audi A8. It’s only $5,000 to reserve one, which is expected to be in production sometime late in 2013, with anticipated delivery early in 2014. Disclosure, I’m a sucker for the falcon wing doors. By the time I receive my vehicle, I’m sure there will be a dealership close by where I can take my shiny new electric car, should anything at all go wrong with it.

Unfortunately, under Texas state law (and most states, actually), auto manufacturers are banned from selling direct to car buyers, so the likelihood of a dealership within electronic driving distance is another obstacle for Tesla to overcome. The company does have a “showroom” in Houston, where people can learn about the technology, pretend they’re Speed Racer and take a seat in one of the vehicles, and enjoy “hands-on exhibits”. But with the basest of the base models, the Model S, starting at $49,999 (after $7,500 Federal tax credit), I’m probably not alone in the school of thought that with the current sticker price above median household incomes, most folks are going to want to take it for a spin. I tried to reserve one, but it’s currently sold out. I’m going to see if I can reserve one of those wicked Model X's, but the purchase price is nowhere to be found.

I am not a fan of investing my money with “niche” companies which, even by the strictest Catholic school definition, Tesla rests in that category. The company has had a very nice run since their IPO in 2010, currently trading around $35, close to their 52-week high. Given the numerous contrarians lining up behind these companies, though, I am going to have to sit tight with my long position in Ford and enjoy the shiny new model dividend they just started delivering this month. That 1.6% dividend yield should be just enough to fill my tank up once each quarter.

With the emergence of natural gas vehicles and the major automakers fast developing hybrid engines for their current models, the competition looks to be another major hurdle for Tesla to jump. A recent Reuters article lists numerous challenges the electric car manufacturers face, mentioning currently these cars are quite simply, “toys for the rich”. And with only 16 Tesla “stores” in the U.S., half of those located in California and Washington, it’s not as though they are exactly reaching a wide audience.

Since I don’t consider myself rich (I don’t eat sweets), and I don’t like to spend copious amounts of hard-earned dollars on electronic “head turners”, I will have to do my car shopping at the numerous Ford dealerships in the greater Dallas-Fort Worth area, maybe inquire about the possibility of those natural gas trucks eventually being made available to the public. Maybe sometime around 2014.

Motley Fool newsletter services recommend Ford and Tesla Motors . The Motley Fool owns shares of Ford. kmet312 owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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