Although Tesla Motors Inc is based in the USA, & only exports a fraction of its electric vehicles to the UK, a Brexit vote could have adverse effects on the firm. 2016 has been a crucial year for Tesla, with the launch of its Model 3 EV on the 31st of May. The launch of the Model 3 was highly significant, as it was their first electric car aimed at the mass market, with an affordable price tag (the price of a Model 3 starts at $35,000.) Via a Tweet, CEO of Tesla Motors Inc, Elon Musk, described it “as the biggest product launch ever.”
Progression Away from Fuel Cars Could Be Affected, Hurting Tesla Motors Inc
According to basic economic theory, as a resource becomes scarcer, its price increases. Therefore, as oil is a finite resource, its value should generally increase over time, increasing the incentive to use alternatively powered cars e.g. electric vehicles, such as Tesla Motors Inc’s Model 3. Many governments have subsidized the purchase of electric automobiles in a bid to increase demand for them, reducing pollution & combating global warming.
It is speculated that other member states (of the EU) may also consider leaving, if the UK public decided to do so on the 23/06/2016. The EU is a very effective way to pass legislation or formulate policy e.g. provide a fixed subsidy to customers of EVs in all member states. Therefore, a decrease in the size of the EU could limit the effectiveness of this legislation, potentially limiting the demand for Tesla’s cars. As of June 2016, EU Countries are separately implements & enforcing their own subsidy programs for electric cars, but a EU-wide program could be more effective.
It should be noted that while the UK is a small nation, it has one of the largest economies in the EU, & is seen as a key member state, alongside France & Germany.
Referendum Outcome Set to Be Marginal
According to a recent Opinium poll, the referendum outcome will be tantalizingly close, with Brexit leading by a mere 1%. The Bank of England & IMF have issued warnings of the potential economic effects of the UK leaving the EU. According to UBS Group AG , up to £350 billion (around $500 billion) could be wiped off the FTSE 100 index as a result of a Brexit Vote. Ultimately, the effects of a leave vote on the economy & on firms like Tesla will depend on the trade deals that Britain negotiates with its trade partners.
In other Tesla related news, it has been reported that the California based car marker could build a new factory in the city of Shanghai. This joint venture could be worth up to $9 billion. As of 12:24 EST, a share in Tesla Motors Inc is down by 8.82% so far today, trading at $200.23, giving the company a market capitalization of $29.19 billion.