Tesla, the maker of the slickest looking EV on the road, went public in late June. Since going public the stock has been hit with ups and downs. Currently, at the time of writing, the stock is around $28 a share
but had been at $70 at a high of about $32 in the early fall.
“The metamorphosis from concept stock to reality stock brings heightened risk. Tesla shareholders are long a near-dated call option on Model S launch and a longer-dated call on mass EV adoption. The former has appreciated handsomely while the latter is declining.” Wrote Morgan Stanley analyst Adam Jonas.
Morgan Stanley has officially cut the stock two notches from overweight to underweight. The fear is that electric vehicles (EV) sales will not push more that 4.5% of total vehicle sales by 2025, a large reduction from earlier predictions of 8.6%.
For Tesla and the brands fans 2025 is indeed far off, the company is more concerned about how the Tesla Model S sedan will fair in 2012. The Model S is expected to be released midyear.
The fact is the EV market is growing slowly. While there are many factors that can be attributed to the slow growth of EV adoption in America, the poor state of the American economy is a major player. The U.S. has recently released data that shows that one in two Americans are poor or living in the low income bracket. That means half the nation is probably not going to be looking for a new car or buying stock anytime soon. Or if they are the odds are they are going to stick to technology that they know with a good miles per gallon rating and invest in a stock that has not taken a nose dive.
With the news of the Tesla stock downgrade making headlines and the around the clock coverage of the Chevy Volt investigation the end of 2011 has not been kind to the EV market.
Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison