Tomahawk, WI 9/04/2013 (BasicsMedia) – The electric car manufacturer, Tesla Motors Inc. (NASDAQ:TSLA) proved its position in the industry with the recent grand success of the model S sedan. The sales volume and revenues reported by this model in the state of California are moving beyond competition from any other players in the market. The company had proved its efficiency in manufacturing cars that do not compromise in any way on the comfort and style while moving on to provide the electric car experience. However, the company is set to face higher level of competition than it expected from few major players in the near future.

Competition from Nissan Leaf

While the model S sedan of Tesla had proved to be successful in the recent past, it is worth noting that Nissan Leaf is gradually emerging as a cheaper and highly available alternative to the users. It is possible that Nissan takes up the ride of electric boom which was actually initiated by Tesla, as the company had not planned to release a lower end car at least until 2016. If Nissan proves efficient to improve on the range and comfort of its electric offering, then it is possible that it would manage to appreciate its market share in the electric cars before Tesla would release its lower end model.

Business model of Tesla

It is worth noting that Tesla Motors Inc. does not make its money through the sale of electric cars in California, rather the revenues are generated to a higher extent from the sale of green tax credits in the state. In addition, the company also relies on the government subsidies that are given for the manufacture of such electric cars in a move to curb environmental pollution. Thus if Nissan proves able to increase its market share for electric cars, then it would mean that there would be an increase in the sale of green credits in the state of California which would in turn result in the decline of prices for these credits.

Problems in funding the new model

Tesla Motors had been planning to leverage the government subsidies and the tax breaks to manufacture a new electric car in the near future. However, if the prices of green credits are to drop, then Tesla would face problems in funding the production and the dream of launching the new electric car model to the markets would not come true. It is further worth noting that Nissan had been playing effectively in the automotive markets and is likely to have appreciable share in the electric car segment in the near future.

While the stock of Tesla  is presently trading at prosperous levels and had been highly attractive to the investors and analysts in the market, it is also essential to state a word of caution on the unsteady period that the company might face in the near future resulting from the sales of debt or equity. Investors will necessarily have to be aware of the tough times that are lying ahead for this stock of the electric car manufacturer.

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