Is Tesla Inc. (NASDAQ:TSLA) Strong Enough to Take over the Auto Industry?


Tesla Inc. (NASDAQ:TSLA) impressive run in the market is one that continues to evoke mixed reaction on Wall Street, its market capitalization having surpassed that of Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM). The big question among most investors at the moment is whether the pioneer of electric cars has what it takes to lead the next car revolution.

Financial Power Factor

Ford, GM and Chrysler turning in lackluster numbers on sales in the recent past is already fueling talk of why Tesla could be the next big thing in the auto industry. The automaker is closing in on 100,000 cars deliveries this year at the back of growing demand for autonomous electric cars. However, it is still early in the game to deduce that the electric car company will disrupt status quo in the sector.

The big three automaker’s financial power is one that should continue to give them an edge even as Tesla continues to make a push for market share. The three largest automakers have invested more than $30 billion in new jobs and facilities over the past eight years something that should continue to safeguard their position in the industry.

While Tesla market cap has been increasing at an impressive rate, its cash balance of just $3 billion is still a shadow of the $83 billion shared among the big three. The three automaker as it stands have at their disposal enough cash to invest in long-term revenue generating projects should they feel threatened by the electric car company.

Distribution Network

Tesla gaining market share is highly dependent on its ability to sell more cars than the big three. However, as it stands, this is one area that the electric car company still needs to work on if it is to be a force to reckon with when it comes to car sales. The big three boast of a robust vast dealer network that employs over one million people something that continues to give them an edge in the industry.

General Motors, Ford and Chrysler’s manufacturing scale and expertise is one that Tesla cannot match at the moment even as it continues to send shockwaves in the industry. The three automakers should continue to develop cool new features that customers yearn for therefore protect their edge in the industry.

Tesla stock was unchanged in Friday trading session having soared by $5.44 to close the week at highs of $314.07.

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