When we look to the future, electric cars will play a larger role and that is good for the  environment. One of the leaders or at least well known companies is Tesla and its President Elon Musk. According to Chris Horwood of Orbis Investments inn 2009 it was a nice idea as costs were about $900 a kilowatt hour, today the costs have fallen to $250/kwh. As prices continue to fall the cars are within more car buyers.

If you had invest in Tesla in 2009 IPO the company has since tapped over $13 billion in equity and debt and the price of the shares have increased. That is a good thing.

In the stock market there are many alternatives and as an investor you job is to compare and contrast alternatives. One method is to compare Tesla’s market value and other fundamentals to determine which company is better to buy.

Tesla accounts for 6% of the market capitalization of the top 20 auto makers but less than 1% of the book value, sales and gross profit. To match the others it would have to grow 700%. Can it do it, maybe?

At the moment the best selling electric car is made by Nissan called the Leaf. It has more shipments that all of Tesla combined but Tesla trades at 15% more than Nissan. in addition, one of the best automobile manufacturing companies is Toyota. The other large Japanese company Honda has 12 times the sales, 13 times the gross profit and 14% the tangible book value.

Linking to dividend paying stocks, Tesla is an exciting young company but it is the best alternative? Only time will tell but the major Japanese companies are very good at manufacturing, have an excellent distribution dealerships and are profitable. When you consider the alternatives, sometimes decisions are changed.

There are more questions than answers, till the next time – to raising questions.