Will Tesla Solve Its Biggest Problem Tonight?

Before you go, we thought you'd like these...
Before you go close icon

Tesla's 2013 Model S. Photo Credit: Tesla Gallery.

Some of the greatest innovators and leaders aren't recognized as such because of their penchant to solve incredibly difficult problems - although many do just that. Rather, it's by solving problems with answers so simple that they're typically overlooked. Tesla has announced a press conference to be held today to demonstrate how its Model S will jump a hurdle some consumers and investors have complained about - the length of time it takes to recharge its battery. Even Consumer Reports, which recently gave Tesla's Model S a rating of 99 out of 100, had only one complaint: that it could take six hours to recharge a battery if traveling long distances. Here's how the problem has perhaps been solved.

Think outside the box
As I mentioned, sometimes the best answer is the simplest and is often overlooked. This time, though, the solution may have been overlooked because it had been tried before and failed. The company Better Place, which filed for bankruptcy this year, had a similar strategy. But its strategy had one flaw: It serviced consumers with lower incomes than your typical Tesla buyer, and it couldn't keep the battery swap cost low enough to remain successful.

Tesla hasn't yet provided any details on how this battery pack swap will take place, opting to demonstrate it instead. The idea of a battery swap instantly raises a few questions. For instance, as batteries age they consistently hold less and less charge, and swapping a battery for another of dubious quality could pose problems. If I just forked over at least $69,000 for a new Model S and then have to hand you my brand-new battery to exchange it for what could be a much older one holding less charge, I'd be very reluctant to do so. I'm quite sure Elon Musk has thought of this, and that it is a problem that already has a solution and will be explained tonight - but we'll see.

If Tesla has indeed drawn up a way for a quick, painless, and cheaper way to swap batteries for those drivers worried about traveling long distances, then it will be a very positive development for investors. The battery swap solution could boost revenues by bringing additional consumers to Tesla showrooms who were originally hesitant to purchase a Model S because of driving distance limitations. It would also give investors more confidence that Tesla will continue to innovate its way past other problems that will undoubtedly arise - giving more justification for its very lofty valuation. In addition to all those potential benefits, this development continues the seemingly endless positive publicity that Tesla has received lately, even through a recall - which was handled extraordinarily well.

Bottom line
Tesla has been one of the wildest rides in the stock market to witness this year, and the company has a very divided following. Many Fools are at opposite ends of the argument; some believe Tesla could live up to its lofty valuation, others believe that its share price has risen far ahead of its actual value. One thing is for sure: Tesla is jumping one hurdle at a time, and while I believe that the company will fight an uphill battle over the short term, it could be one incredible long-term story for patient investors willing to endure speed bumps throughout the decade.

Is Tesla doomed to crash just as fast as it has surged these last two months? Giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.

The article Will Tesla Solve Its Biggest Problem Tonight? originally appeared on Fool.com.

Fool contributor Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading