The hottest stock in the market this year has to be Tesla Motors (TSLA). Shares are up 430% for the year, and that includes last week’s two-day slide of more than 10%. A downgrade on Tesla stock by Baird analyst Ben Kallo from “outperform” to “neutral” sent shares lower, and the selling was exacerbated by video of a fire in a Model S sedan just outside of Seattle.
Certainly, last week hasn’t been good news for the Palo Alto, Calif.-based electric vehicle maker … yet not all of the news for TSLA was bad.
One interesting, yet mostly overlooked, recent news item came from Tesla’s home turf, and it could be the key to continued prosperity not only for TSLA, but for the entire electric vehicle, hybrid and EV charger market.
On Monday, Sept. 23, the Palo Alto city council voted unanimously to adopt a policy mandating that every new home be wired to accommodate EV charging stations. The vote was a part of a number of proposals that Palo Alto officials have undertaken to position the tech-savvy city at the forefront of the EV revolution.
Now, I must say that as a free-market advocate, I am no fan of “mandates” when it comes to forcing homebuilders to wire up new homes to accommodate electric vehicles. I think that if you own an EV, and if you want a charging station in your home, then you should put that charging station in yourself and pay the additional cost associated with wiring your home for that task.
That being said, I can’t ignore the fact that this mandate has passed, and that Palo Alto isn’t going to be the only city to take such steps in the future.
All of this is great news for Tesla stock, but it’s also good news for the EV market in general. That’s because one of the stumbling blocks to increased adoption of EVs — and even hybrids from automakers such as Ford (F), General Motors (GM), Honda (HMC), Toyota (TM) and others — is the paucity of charging stations across the country, as well as the additional costs needed to equip a home with an EV charging station. This is one reason why earlier this year, Tesla CEO Elon Musk announced plans to build a “Supercharger network” across the country.
The ability to, in essence, have an EV “filling station” in your home is something that would make owning an electric vehicle or hybrid a lot easier. And, like it or not from a free-market perspective, the Palo Alto mandate for new homes to be equipped with the wiring needed to power the in-home charging stations is a small but significant stride in that direction.
Of course, the Palo Alto city council’s decision isn’t the kind of tradable news item the way a downgrade or a car fire might be. It is, however, likely to be the kind of decision that lays the groundwork for a long-term shift in the acceptance, adoption and mass acceptance across the country of a still nascent industry.
Once that groundwork is in place, literally, you can count on TSLA and the other automakers to take it from there.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.