Shares in electric car maker Tesla continue to climb after Morgan Stanley predicted its stock will nearly double in the next 12 months. But as Ivor Bennett reports, the sector still faces plenty of challenges.
It loses more than 4,000 dollars on every car it sells. The popularity of Tesla's Model S costing the company over 350 million dollars in the last quarter alone. But it seems that's no barrier to success, at least according to one analyst at Morgan Stanley, who's predicting Tesla's stock will almost double in the next 12 months. Tesla's closing price on Friday was 243 dollars. But analyst Adam Jonas thinks it can rocket to as much as 465 dollars, increasing Morgan Stanley's price target by 66 percent. He thinks the company will benefit from a mass app-based sharing service - think Uber, but without the drivers. But Justin Urquhart Stewart from Seven Investment Management is more cautious. (SOUNDBITE) (English) JUSTIN URQUHART STEWART, HEAD OF CORPORATE DEVELOPMENT, SEVEN INVESTMENT MANAGEMENT, SAYING: "I'm very concerned about buying into something like that. It may be cutting into new technology and being successful. I like buying the second stage to it, actually how do we take this new electric power and actually develop it to a further stage. So I regard that as a bit of fashion stock overall so I would let someone else have that." Tesla's shares jumped over 4 percent on the news. But with increased competition and regulation looming, there are still plenty of potholes ahead.