Just when you thought that electric cars were running low on juice, along comes Wall Street with its foot on the accelerator.

Lazard Capital initiated coverage of Tesla Motors (NAS: TSLA) this morning with a buy rating. Analyst Sanjay Shrestha is establishing a price target of $42 on the stock. That may seem conservative in light of Maxim Group initiating a $50 price target last month, but even $42 represents a better than 40% return off yesterday's close.

Barclays Capital and Goldman Sachs have also reiterated their bullish positions in recent weeks.


Why is everyone rallying behind the American maker of all-electric vehicles?

It's certainly not gas prices bringing Wall Street around. Prices at the pump have been falling in recent months, surprising the pros that figured fuel prices would head higher into the seasonally potent summer travel season.

It's also not the fundamentals behind the industry itself.

General Motors (NYS: GM) has had to temporarily halt production of Chevy Volt vehicles at least twice in recent months in light of soft sales for the plug-in electric, which is backed by a small gas tank for greater range. Stories earlier this year -- including advanced lithium ion battery maker A123 (NAS: AONE) staging a recall and reports of some Tesla Roadster batteries failing -- also spooked potential buyers.

If lower gasoline prices make electric cars less attractive due to longer time frames to recoup the fuel savings by going electric, then why are analysts scrambling to be on the bullish side of Tesla? Well, the "S" marks the spot.

Deliveries of Tesla's Model S -- originally set to hit the market in July -- will begin a week from Friday. The initial production run was sold out long before gas prices began heading lower, but the very presence of the car out on the open road will turn heads and attract interest. Tesla's original Roadster was a sporty indulgence, but the six-figure price tag kept most buyers away. The Model S starts at a more reasonable $49,900.

The electric car industry will be validated throughout the year as other carmakers roll out their plug-in models, but next week is when Tesla will once again be turning heads. You can't blame analysts for making their bullish opinions known before it becomes fashionably obvious.

Hit the road
Tesla is revving up to be another potential winner recommended in the Rule Breakers newsletter service, but there's a different multibagger that has the growth stock service's attention these days. Find out what that stock is with a free report.

At the time this article was published Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Motley Fool owns shares of Tesla Motors. Motley Fool newsletter services have recommended buying shares of Tesla Motors and General Motors. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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MrEnergyCzar

I just hit 10,000 miles in my Volt and spent $105 in "total" fuel (free electricity from extra solar at home). I used 28 gallons and drove 92% in electric mode. Driving is fun again for many reasons...

MrEnergyCzar

June 16 2012 at 10:50 PM Report abuse rate up rate down Reply
philblock

1. I am an EE.
2. I was driving electric cars of various sorts over 60 years ago.
3. I spent the 1970s in Silicon Valley where quite a few engineers there were tinkering with battery operated EVs and they ALL ran up against the Achilles heel--the rechargeable battery--and these cars were very efficient. Many EV rallies there proved that. Yes--batteries today are a lot better--but not good enough for an EV.
4. Short range--nice--300 mile?--"I'm from Missouri--show me." If there were a rechargeable that could power a decent vehicle--stero, AC,etc., I would be in the business of building battery operated cars NOW (and so would a heck of a lot of other EEs.)
5. Sure--EVs are great--and someday will supplant the ICE. But not the battery type. The Fuel Cell WILL be the power plant for a successful EV in the future (which I reiterate).
6. From the financial point of view, remember, almost all the wind farms, solar plant-installations, battery operated EVs Tesla, are being financed by the Government (ie. tax payer, and the ignorant stock market gambler).
6. And for y'alls info, almost EVERY auto mfg. is developing Fuel Cell powered vehicles--practical 4 wheeled platforms that CAN compete with today's ICE.
7. And-yes! Mr. Elon Musk is a lot smarter? than I. I don't have the talent for conning the Government (taxpayer) and the public out of millions (billions?) to produce a phantom car. If I did, I would be sitting on my yacht sipping mint julips in Charleston harbor and not answering replys to my FACTUAL statements made by people who are caught up in their own enthusiasm and make statements base on feellings and not facts. FINIS!

June 15 2012 at 5:43 PM Report abuse -1 rate up rate down Reply
Paul Scott

Phil's comments notwithstanding, the plug-in vehicle, encompassing both the plug-in hybrid (Volt, Prius) and BEV (Nissan LEAF and Mitsubishi i) will gradually supplant ICE vehicles over the next 20 years. Phil has never driven one of these cars, so he is speaking from ignorance.

I bought my first electric vehicle, a Toyota RAV4 EV, in 2002. I drove it for over 8 years and 91,000 miles with virtually no maintenance needed. I never once went to a gas station, and since I generate my electricity from sunlight falling on my roof, I only pay my utility about $100 per year for both my home and car.

Last year, I bought a Nissan LEAF, and loved it so much, I took a job selling them, along with solar systems. My customers are incredibly happy with their cars. I know lots of Volt drivers, too, and to a person they are very happy with their purchases. Before you cast aspersions on this technology, you'd be smart to drive one and see for yourself.

As for Tesla, anyone betting against Elon Musk and his team is likely to lose their money. Elon's companies, Space X, Tesla Motors and SolarCity are all extremely successful. He has his finger on the pulse of the future. He's quite a bit smarter than Mr. Phil I suspect.

June 15 2012 at 3:51 PM Report abuse rate up rate down Reply
Nick Butcher

Phil - not a single one of your criticisms of Tesla or EVs makes any sense.

Decent rechargeable batteries obviously exist, otherwise Tesla wouldn't be able to make a performance sedan with a 300 mile range using them.

The automotive industry might one day be displaced, but it won't be by the Electric Vehicle. I don't know if you noticed, but they're all being MADE by the automotive industry. Their ICE divisions may take a hit, but they'll be replaced by electric motor, converter, and battery integration divisions. Do you think BMW make their own sparkplugs?

June 15 2012 at 5:01 AM Report abuse +1 rate up rate down Reply
philblock

More hype. The battery operated electric car is a joke, and has been for a hundred years. T. Edison realized this when he became cognizant of Ford's ICE. The only reason anyone is recommending Tesla stock is the hope of driving it up so they can get out of it because they bought it so high--or attracting new buyers so they can make a quick profit. The majority of people who purchased battery operated electric cars today have no clue as to what they are buying--the few that do look at the car as a status symbol or toy (have more money then they know what to do with). The battery operated EV will never be practical--why?--because the chemistry for a decent rechargeable battery does not exist. One can break man made laws, but the laws of nature (science, whatever) cannot be broken--that simple. The Fuel Cell is the only device that will allow a REAL EV--why?--because it operates like an ICE--it will produce power as long as fuel is fed to it. The engineers(?) at Tesla, and everywhere else, know this. I suspect the engineers (?) at Tesla are just treading water until they can come up with an affordable Fuel Cell to install in their car. The auto mfgs. really don't want a real EV--why?--the end of their control of the auto industry--as Ford's car ended the horse industry-- the PC ended the era of the big computer (almost)--and a number of computer mfgs., the electric light almost turned off the gas industry--the steamboat ended the sailing shiip-- the telegraph the Pony express--etc.,etc.--every new invention puts an old one out of business. So---good people--do your homework before you buy stock in the tulip industry.

June 14 2012 at 9:34 PM Report abuse rate up rate down Reply