Tesla (Nasdaq: TSLA) Stock's Bullish Long-Term Outlook Boosted by China Mandate

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Tesla Motors Inc. (Nasdaq: TSLA) stock is known for its short-term volatility, and volatility was once again the name of the game this week. TSLA stock jumped as much as 4% yesterday (Monday) from its open price, before dipping as low as 3.7% today.

Investors can expect TSLA to remain extremely volatile in the short term. Seemingly every week, or even every day, a new story breaks that sends the stock up or down accordingly.

But recent news from China solidifies the case for TSLA stock's long-term potential...

TSLA stock

Over the weekend, Chinese officials announced that a mandate starting in 2016 will require that 30% of all cars used by the Chinese government must be electric-powered. The mandate was created to combat pollution in the world's most populated country. 

The mandate also coincides with Tesla's entrance into China.

Chief Executive Officer Elon Musk ceremoniously delivered Tesla's first vehicle to China in April, which marked the start of the company exporting to China. Before that, Musk had set an overall production goal of 500,000 vehicles annually for Tesla by 2020.

At the same time, Chinese officials stated that they want 5 million electric vehicles (EVs) on the road by 2020. Both Tesla's and the Chinese government's lofty goals appear mutually beneficial.

While the Chinese mandate doesn't mean that the electric vehicles used by the Chinese government will necessarily be Tesla models, it does boost the overall EV market in China - which is good news for both parties.

It also plays right into Tesla's most recent strategy...

Tesla's (Nasdaq: TSLA) Unorthodox Strategy

Tesla is making bold moves to increase the popularity of all electric vehicles - a strategy that will eventually boost Tesla's own sales figures.

According to a post on Tesla's blog, new vehicle production is nearing 100 million vehicles annually, and there are nearly two billion operational vehicles worldwide. However, automakers attribute less than 1% of their total vehicle sales to electric vehicles on average.

Musk made a move to change things last month when he announced that the company would be opening up all its patents in an attempt to jump-start the global EV market.

"We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly evolving technology platform," Musk said last month. "Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal."

As the EV market takes off around the world, so too should Tesla - and its stock.

When the company delivered its first vehicles to China, officials said they expect China to contribute one-third of Tesla's global sales growth by the end of 2014. Accordingly, the company also said it plans to open stores in 10 to 12 cities across the country this year. Musk has also said he'd like to start manufacturing vehicles in China.

This weekend's mandate news is good news for the EV industry and for Tesla as well. It's another reason why the long-term potential for TSLA stock remains strong...

Tesla (Nasdaq TSLA) Stock's Long-Term Potential

Due to the volatility we talked about earlier, TSLA stock is not a short-term play right now.

However, investors looking for aggressive long-term plays will find TSLA to be a good option. Tesla and Musk are pioneers in the EV market and have shown a continued determination to changing the way the world views electric vehicles.

The fact that China, the world's largest auto market, is trying to promote electric vehicles is another bullish long-term factor for TSLA stock.

Money Morning's Chief Investment Strategist Keith Fitz-Gerald has said the long-term potential for TSLA stock is undeniable.

"I think Elon Musk is one of the most dynamic CEOs on the planet, and I believe he has the potential to make Tesla a $1,000 stock within the decade," Fitz-Gerald said.

Do you invest in Tesla? Join the conversation on Twitter @moneymorning @KyleAndersonMM with #Tesla.

Editor's Note: Elon Musk has helped Tesla stock gain 74% in the past year as the company operates as a major tech game changer.

Now Tesla is engaged in a highly sensitive venture called BlueStar that could disrupt $737 billion of the U.S. economy and impact 98% of the population.

Few details concerning BlueStar have made their way into the press. However, a recent investigation uncovered some shocking revelations... take a look.

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