Many experts have considered Tesla stock to be a risky investment with the potential for high rewards. Everything from the CEO, Elon Musk, to their manufacturing processes and anything in between is controversial and worth a discussion when pursuing investment strategies. Experts have always had a difficult time predicting stock futures with Tesla and that likely won’t be changing any time soon. Here are some of the risks to be aware of if considering investing in Tesla stock.
Gas Prices Declining
The oversupply of oil and gas worldwide has decreased gas prices significantly in a short amount of time. Assuming this trend continues, consumers may be less inclined to buy electric vehicles since gas-powered ones are inexpensive to operate. Even if gas prices rise, which is expected in the near future, consumers have to be convinced that an electric vehicle is more economical when factoring the long-term outlook of gas prices. The lower those prices are, the less likely consumers are to buy electric cars.
Increased Competition With Electric Vehicles
Tesla’s competition with manufacturing electric vehicles has been limited to date, but that competition is expected to increase in the coming years. Chances are the competition will offer electric vehicles at more reasonable prices that will attract a large consumer base. And if these manufacturers already have a broad consumer base, consumer loyalty will be difficult for Tesla to win over. Throw in tech companies like Apple and Google that believe they can take part in the industry and Tesla’s competition could increase significantly in the coming years.
High Price Tag Of Tesla Cars
When the price tag of a Tesla car is $75,000, the consumer base will be limited. Even the lowest model being priced at $35,000 is expensive for consumers. The problem is Tesla can’t lower the prices very much due to high manufacturing costs. So unless new technology becomes available to streamline manufacturing processes and make them more inexpensive to make, the price tag of a Tesla vehicle will continue to be high.
Tesla’s Organizational Structure
Tesla’s organizational structure is something investors have to look at closely. While Elon Musk is a proven business mind, he is also essentially a part-time CEO at Tesla. It’s always beneficial to base your investment strategies around companies with solid foundations and a good organizational structure, but this has always been a question with Tesla. However, through all of the questions, controversies and market volatility, Tesla has consistently made it through them all so it’s hard to argue against their business model too much.
At Stock Investing Info, we help investors put together investment strategies based on their short-term and long-term goals. Tesla is an attractive option for many reasons, but it’s usually investors with a high-risk tolerance who are most attracted to them. The potential rewards can’t be overlooked, even though the stock futures are often uncertain. If you would like to talk through the pros and cons with one of our experts, feel free to contact us at any time.