Tesla Inc. has been enjoying quite a ride as of late, capped by the fact that stocks are surging. But the more they rise, the harder they fall. In the eyes of critics, Tesla's breakthrough is remarkable, but there will always be the point where they have to be open to possible dips. They need to be prepared for such scenarios to cushion a potential fall.
Reuters points out how analysts claim that demands for electric vehicles may sour at one point. And one factor they see are subsidies, which may either be used up or change depending on a country's situation. Countries like the United States, Canada, and China have different cases. In each scenario, there could be a severe effect on Tesla's sales and projections in the coming years.
In the US, electric vehicles are subsidized with a $7,500 consumer tax break for the first 200,000 vehicles automakers sell. Once that is used up, the tax credits are cut in half over the next six months. From there, it will be halved again until the subsidy runs out completely.
In Canada, rebates for electric cars and hybrids were set as part of the zero-emission incentive program passed last year. Electric car buyers could get as much as $5,000 while plug-in hybrids at $2,500 in rebates. It should be noted that these rebates apply only to vehicles worth $45,000, although there are exceptions to select models worth $55,000.
China could end up rolling out the harshest change of all. After introducing a five-year program for new energy vehicles (NEVs), the Chinese government could phase these out with firms becoming overly reliant on them. The program stays for now, but there is that looming possibility that could adversely affect electric vehicle sales.
The case is not limited to the US, Canada, and China. Other countries that could roll out changes in subsidy under the Tesla core countries include Norway, Netherlands, the United Kingdom, and Germany. It remains that pricing for electric vehicles is far off from the standard fuel-powered ones. This early, Tesla may want to consider this as a factor in future business plans.
This may be just one issue Tesla would be facing moving forward. As mentioned in a previous post, the American company could tumble at some point. Analysts dug into historical data related to Tesla's stock surge. According to Bernstein analysts, the surge of Tesla shares to more than 100-percent in the last six months saw a forward 6-month absolute return of just 2.6-percent. Though it excludes some factors, it is something that Tesla needs to delve into moving forward.
