According to a recent CNN Money article, low oil prices may have already started to affect electric car sales. Shares of Tesla have decreased more than 25% from their all-time high in early September. During the same time frame, crude oil prices also dropped over 30%. The shares of SolarCity, the solar panel that Tesla's CEO is chairman of, have fallen more than 30% as well. The article notes that the decision for many people to buy Teslas is based more on environmental concerns rather than economic ones. The author suggests that someone who is willing to fork over the money for a Tesla probably isn't extremely worried about gas prices. The decline in Tesla stock prices may be partially due to low expectations of investors, according to the article. Overall, falling oil prices definitely aren't helping electric car companies, but it's not likely that oil prices are the only reason that Tesla's stock is down.
http://money.cnn.com/2014/12/08/investing/tesla-stock-oil-prices/index.html?iid=HP_River
As we discussed in class, oil prices are one part of our economy that quickly effects many other areas of it. I am not surprised that lower oil prices are leading to lower Tesla stocks but I wonder if it is because people are buying less electric cars or if it is somehow connected to oil in a different way.
ReplyDeleteI agree with all of the above noted factors that may explain why Tesla's stock is down. However, I think this is just a necessary bump in the road for Tesla as all new technologies take time to improve and eventually perfect. Because the electric cars and their state of the art batteries are such a new thing, they are very expensive to make and must be sold at high prices. Oil will remain a nonrenewable resource and a polluter no matter the price and when Tesla is able to make their batteries more efficiently and their cars more affordable to compete with gas-eating cars, I think Tesla will give them a run for their money. By then, other car companies will most likely have decent alternatives too in order to compete with Tesla and prices will go down even more, bringing the cars into the price range of even more consumers. Tesla is in its early stages and I think they will manage to overcome this obstacle and end up competing. I would buy an electric car just for the convenience of not having to stop for gas ever again.
ReplyDeleteI agree that Tesla will bounce back from this. Oil prices are low now but can't remain this price forever. Electric cars are the future and Tesla has even released their patents to promote competition and innovation in the market. I'm glad oil prices are low which boosts consumption through the wealth effect, but I hope consumers realize it will be short lived, and don't give up on innovators like Tesla.
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