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Tesla Is A Technology Company That Wraps Batteries In Cars

Daily Ticker

Yahoo Autoblog editor Justin Hyde has an interesting take on Tesla (TSLA), the American electric car that just startled Wall Street by reporting an unexpected profit in the first quarter.

Tesla's core competency, Hyde argues, is batteries. Tesla makes amazing battery and battery-charging technology, and then wraps the batteries in cars. Because Tesla is better at doing this than any other company, it has been successful in an arena in which everyone else has failed.

Related: Tesla Pays Back Washington: Do You Know Anyone Who Drives One?

Tesla also succeeded by targeting the perfect segment of the market in which to sell all-electric cars. The big weakness of electric cars, Hyde points out, is their limited range and the time required to charge time. Compared to gas-powered or hybrid engines, these limitations restrict the freedom of drivers. And they have prevented all-electric cars from going mainstream.

But Tesla built its first cars for affluent buyers in areas in which innovation and environmentally conscious thinking and behavior are prized. For these folks, spending $60,000-$100,000 on a car is not an impossibility. And most Tesla owners also likely have another car in their household, thus allowing owners to avoid the range and time limitations of today's electric cars.

Related: Tesla: Why Everyone Should be Rooting for America's New Car Company

In the future, Hyde says, batteries and battery-charging technology will improve--and Tesla will be perfectly positioned to take advantage of that. Tesla also plans to introduce a lower-priced car for less-affluent drivers. If, by then, battery technology has improved, Tesla will be in a great position to sell electric cars to mainstream car buyers.

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