Will This Make Tesla Motors Inc (TSLA)’s Bubble Burst?
The Frankfurt Auto Show gave automakers a chance to prove that Tesla Motors Inc (NASDAQ:TSLA) will no longer be alone in the electric car manufacturing industry. Bayerische Motoren Werke AG (Xetra:BMW) presented the i8, an electric luxury vehicle with 396 horsepower and a $135,925 price tag. Considerably more expensive than Tesla Motors Inc (NASDAQ:TSLA)’s S Model, the battery powered i8 can still pose a threat, due to its brand reputation. Bayerische Motoren Werke AG (Xetra:BMW) also unveiled its i3 city car, which will cost around $46,000. However, this vehicle will only have a range of 160 kilometres, less than half of what the S Model offers with its larger battery packs.
Volkswagen AG (ADR) (OTCMKTS:VLKAY) also revealed its new electric car, the Audi brand Quattro Sport concept vehicle. However, this car isn’t for sale yet. Nonetheless, the German automaker demonstrated that it too, will be competing with Tesla Motors Inc (NASDAQ:TSLA).
However, the competition does not only stem from Germany. General Motors Company (NYSE:GM) is expected to release an electric Cadillac by early 2014, which will compete with the Model S in the U.S.
Tesla Motors Inc (NASDAQ:TSLA)’s rivals are definitely challenging the electric automaker to prove its value. With share prices skyrocketing over the past year, the firm has reached a market value of $20.1 billion. Although this represents about a quarter of Bayerische Motoren Werke AG (Xetra:BMW)’s value, the German automaker produces 90 times more vehicles.
Some doubt whether Tesla is really worth as much as the market suggests, expecting that the hype will soon come to an end. The introduction of electric cars by industry leaders might just make the bubble burst.
One thing is certain: Tesla Motors Inc (NASDAQ:TSLA) delivers high quality vehicles and is ahead of the competition in terms of innovation. In late August, the National Highway Traffic Safety Administration tested the S-Model luxury sedan. The turn out: 5-star ratings overall and all subcategories. These results established a new record for passenger safety and gave CEO Elon Musk a reason to brag. In addition, Tesla Motors Inc (NASDAQ:TSLA) still provides the longest range per battery charge and their experience with this technology is unrivalled.
The time has come for Tesla Motors Inc (NASDAQ:TSLA) to show what it’s made of, as industry rivals are beginning to challenge the electric automaker on its own turf. Shareholders on the other hand should not get too excited, as this new competition could put an end to the firm’s joyride on the stock market.
Disclosure: Pablo Erbar holds no position in any stocks mentioned