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Sam Jimenez
Gebhardt
Econ-202 2:00
Writing Assignment #1
Tesla Electric Cars and the Not So Distant Future
Tesla is relatively new car manufacture that has caught a lot of
attention. In an article in Bloomberg Businessweek, Tesla's Stock Remains
Electric on Higher Sales Forecast, the author, Ashlee Vance, talks about how
Tesla stock and car sales are on a huge rise. Vance says that Tesla recently
released their fourth-quarter results and this caused their shares to jump,
by about 15 percent in after-hours trading. He continues to mention that
this is because Tesla expects to have a 55% increase in sales in 2014 and to
have 28% gross margin. Vance also mentions that shares have shown such
an exponential increase because of the doubt in profitable all-electric cars
that is now diminishing. Vance finishes his article by comparing Teslas high
$27 billion value to GMs $57 billion value and noting that this value, would
only seem to make sense if Tesla can become a mass producer of electric
vehicles.
In Ashlee Vances article, we can see that the market discussed is Tesla
all-electric cars. What we can see is that the demand for their cars is
changing because of their increase of sales and a shortage of supply. This is
due partly to an increase of demand for electric cars, which comes from a
change in expectation. We are seeing that electric cars are becoming more

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and more popular and now are becoming more reliable and Tesla is the
forerunner for this change. When evaluating a Tesla model S, we can see that
it is similar in performance and travel distance to a gas car. This is changing
the previous assumption that electric cars are not comparable to gas and
require high amounts of charging. This shows consumers that the car
market is moving towards electric cars that meet, and surpass, the standards
of gas. This is effectively changing the expectation for the future of electric
cars and ultimately increasing the current demand. Also, we can see a
change number of consumers for electric cars. Previously, eco-friendly
vehicles were not exactly stylish and werent as desired, such as a Toyota
Prius. The Model S has become favorable in terms of style because it is
modeled to be a luxury sedan. That then has caused this eco-friendliness allelectric market to be more favorable to more people because with a great
style the market opens to a greater range of consumers such as those are
interested in stylish luxury type car. This is effectively increasing the number
of consumers and ultimately increasing the demand for Tesla electric cars.
This overall increase in demand ultimately leads to a higher equilibrium price
and a higher equilibrium quantity and in this case more models of all-electric
vehicles on the way. The new equilibrium quantity will have a much higher
increase than the equilibrium price because of the already high price range
of the Tesla car. Regardless of price, however, a drastic increase in demand is
causing this luxury all-electric car company to skyrocket to the level of the
biggest names in car business.

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The article coincides with my analysis in many ways. For example, I
mentioned that there is an increase in demand. Lance agrees with this when
he says, Tesla said it expects to ship 35,000 of its Model S sedans in 2014, a
55 percent year-over-year increase, showing that Tesla is selling more cars
due to more demand. Also, I mentioned that the increase in demand is part
due to a change of expectation. This is reflected in the article when Lance
says, Investors have long questioned the companys ability to execute and
the premise of all-electric cars, leaving Tesla as one of the most shorted
stocks in the U.S. While there are still blips here and thereTeslas biggest
recent problem has been making enough Model S sedans to meet demand,
showing that before, people believed Tesla all-electric cars are could not be
successful, but now sales and demand are increasing and changing this
expectation. Lastly, I mentioned about higher quantity and a shortage
existing with the cars, which is again mentioned in the article. Lance, as
preciously stated, mentions that, Teslas biggest recent problem has been
making enough Model S sedans to meet demand, and, Tesla said it expects
to ship 35,000 of its Model S sedans in 2014, a 55 percent year-over-year
increase, showing that quantity demanded and supplied are on a huge
increase and that a shortage is beginning to exist.

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Works Cited
Lance, Ashlee. Tesla's Stock Remains Electric on Higher Sales Forecast.
Bloomberg Businessweek. Bloomberg L.P., 19 Feb. 2014. Web. 28 Feb.
2014