Tesla Motors Inc. (Nasdaq: TSLA) stock has seen a meteoric rise of more than 770% in the last two years as more electric vehicles (EVs) hit the road every day.
And even though TSLA stock trades near all-time highs of $265 per share, evidence suggests that TSLA still has room to run long-term - because the EV market is growing rapidly...
Hybrid vehicles (electric and gas powered) became popular in Japan in the late 1990s when Toyota Motor Corp. (NYSE ADR: TM) and Honda Motor Co. Ltd. (NYSE ADR: HMC) both introduced their first models. The cars would grow in popularity throughout the 2000s in the United States as gas prices rose and consumers became more environmentally conscious.
By the end of 2013, the world's largest hybrid maker, Toyota, had sold more than 6 million hybrids globally. More than 4.2 million Toyota Priuses alone have been purchased worldwide through 2013.
And while hybrid vehicles were a major step forward, the introduction of 100% electric vehicles is truly revolutionizing the industry.
The biggest key to that revolution so far has been Tesla Motors.
Tesla unveiled the "Roadster" in 2008, but the company sold just 2,250 vehicles over the next four years. While sales were weak, the Roadster paved the way for the Model S sedan.
"Big-name manufacturers such as Honda, Toyota, and others replaced gas tanks with batteries as demand began to rise [in the 2000s]," Money Morning's Global Energy Strategist Dr. Kent Moors said. "But it would be a real-world Tony Stark, billionaire Elon Musk, who would dazzle the world with the polished, luxurious Tesla, an advanced electric vehicle with a range of up to 300 miles on a single charge, who added sizzle and sex appeal to the industry."
Tesla: Revolutionizing the Auto Industry
After retiring the Roadster, Tesla unveiled the Model S sedan. It's a luxury vehicle that starts at $71,000 and is entirely powered by lithium-ion batteries. Many customers end up paying more than $100,000 for a Model S after adding upgrades like a "panoramic glass roof," leather seats, and lavish interiors.
It's not the only electric-vehicle on the market - the Chevrolet Volt and Nissan Leaf sell thousands of models a month - but it is certainly the most eye-catching.
"Musk's vision is the one leading the [electric vehicle] parade," said Moors. "His vehicles are praised by everyone from consumer and auto publications to politicians and automotive executives. The company's stock, up a whopping 1,048% in the last four years, is one of the darlings of Wall Street."
At the end of July, Tesla announced that it was upgrading its production facility so that it can begin manufacturing a similarly priced crossover Sedan named the Model X. Eventually, Musk wants to produce a cheaper vehicle, the Model 3, which will be about half the price of a Model S.
Tesla is also ramping up its production. In May, the company was producing around 700 vehicles per week. Now it produces more than 800 per week, and has a goal of 1,000 per week by the end of the year.
Those figures will help Tesla reach its delivery goal of 35,000 vehicles worldwide by the end of 2014. While that will be a 56% increase from its 2013 delivery total, it's still a long way from Tesla's eventual goal.
The company is planning on building "The Tesla Gigafactory," a massive lithium-ion battery plant that will allow the company to produce enough batteries to power 500,000 vehicles annually by 2020. At that pace, the Gigafactory would produce more lithium-ion batteries annually than were produced globally in 2013.
As these goals keep aiming higher, the stock gains ground. In 2014, TSLA stock has climbed another 73%.
Long-term, the view for TSLA stock remains bullish, and not just because of the company's increased production and its luxurious perception. The EV market as a whole is experiencing rapid growth...
As EV Market Explodes, TSLA Stock Soars
"Navigant Research estimates that global electric vehicle sales will reach 6.6 million annually by 2020, about 5% of global vehicle sales," Moors said. "The U.S. is expected to be the biggest market, accounting for 1.1 million vehicles alone. The International Energy Agency (IEA) expects that 20 million electric vehicles will be on the road by then."
"By any measure, this is a huge and growing market," Moors continued. "Research firm MarketsandMarkets pegs it at $103.13 billion by 2017. IDTechEx forecasts $178.9 billion in electric vehicle sales alone in 10 years, plus tens of billions more in infrastructure costs."
Tesla already has the name recognition among EV producers, and is doing the most to lift the entire industry. In June, Musk opened up all of the company's charging patents in order to get all electric vehicle companies on the same page.
While the move was viewed as risky, it showed the company's dedication to the overall industry. That dedication and innovation from the company, and Musk, also shows Tesla's potential.
"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," Money Morning's Chief Investment Strategist Keith Fitz-Gerald said.
Now: Mainland China has leapfrogged the United States to become the biggest e-commerce market on Earth. And we've found a simple way for you to start profiting from this lucrative industry today...