By Josie Tesla Motors has seen a rollercoaster ride when it comes to its share price over the past few years. As an innovative company in the electric vehicle and clean energy space, Tesla is sensitive to a variety of factors that can impact investor sentiment. In this article, we will explore some of the key factors that have influenced tesla motors share price.
- Demand for Electric Vehicles
One of the most obvious factors impacting Tesla’s share price is demand for its electric vehicles. When Tesla sees strong demand and deliveries for its Models S, X, and 3, its share price tends to rise. Any indication that demand is slipping leads to declines in share value. Tesla has aimed to ramp up production and deliveries, especially for its mass-market Model 3. So far, demand has remained relatively robust, providing support for its share price.
- Production Efficiency
In order to fulfill demand, Tesla must demonstrate its ability to efficiently manufacture cars, batteries, and solar products. Throughout 2018, Tesla struggled with production issues related to the Model 3, encountering delays and bottlenecks. As Tesla irons out production and efficiency issues, investors are likely to respond positively. The development of production facilities, like its Shanghai gigafactory, is aimed at improving economies of scale.
- Profitability Outlook
For several years, Tesla has operated at a loss as it invested heavily in R&D and future growth. Investor optimism has remained high based on the long-term profitability outlook. Any indication that Tesla is moving towards sustainable profitability is likely to boost the share price. Progress towards profit goals and positive earnings reports would signal Tesla is on the right track. Conversely, big losses or lowered earnings guidance can quickly sink the share value.
- Energy Business
Although Tesla is predominantly recognized as an electric vehicle manufacturer, its energy business, including solar panels and battery storage segments, continues to expand. Tesla’s clean energy business grew with the 2016 acquisition of SolarCity. High performance in the energy business through the installation of solar and Powerwall/Powerpack systems can increase revenue streams as well as share prices. Delays or a weak energy sector could be detrimental.
- Competition
Tesla increasingly faces competition, especially from main-stream automakers. Companies such as Volkswagen, GM, BMW, and so on are speeding up their electric vehicle programs and product offerings. Cheaper EVs could curtail demand for Tesla’s lineup. Contrastingly, Tesla’s position as a technology leader in EVs may help it justify the premium valuation. The degree of rivalry within both automotive and energy markets will impact investor sentiments.
- Government Policy
Government policy because Tesla depends on tax incentives to increase EV adoption. Demand can also be controlled by regulating emissions and fossil fuel vehicles. The reduction in orders is likely due to the phase-out of EV tax credits. However, tougher nationwide emissions regulations could work in Tesla’s favour as compared to traditional automakers.
To conclude, many factors affect the Tesla Motors share price. Major drivers include demand for electric vehicles, production efficiency, profitability, competition, government policy, and Elon Musk’s leadership. Monitoring such factors can assist investors in predicting the direction of Tesla’s stock valuation and price fluctuations. If Tesla can continue to be innovative and execute on growth plans, investors will likely remain bullish, which would help with the share price.