Will the Tesla share price continue to rise?

The Tesla (NASDAQ: TSLA) share price has put in a fantastic performance this year, even though after the stock jumped to a high of nearly $900 in January, it slumped to around $560 in May.

But since then, shares in the electric vehicle manufacturer have been on a tear. Now the stock is having another run at the all-time high reached earlier this year. Over the past 12 months, the stock has returned 102%.

It seems as if investor sentiment towards green businesses and its own improving operating performance are the reasons behind this charge higher. 

And as the world continues to spend more and more time and money on green technology and renewable energy, I think the Tesla share price is only just getting started. 

Rising to the challenge

One of the biggest headaches car makers worldwide have had to deal with over the past year is a microchip shortage. This has caused many producers, including Tesla, to limit production. 

However, rather than waiting for the rest of the market to catch up, the company, led by its visionary CEO Elon Musk, has developed new software allowing it to use different microchips. 

This is helping the enterprise navigate the current economic environment. These changes will also help it meet the rising demand for green vehicles.

Indeed, it looks as if the group cannot make cars fast enough. In the UK, which is relatively small compared to some regions, Tesla has taken the market by storm. The firm’s Model 3 was the best-selling electric vehicle in 2019 and 2020. 

Meanwhile, the electric vehicle (EV) market as a whole is exploding. Nearly as many EVs were sold in September in the UK than the whole of 2019. Of the 33,000 pure electric cars sold, 7,000 or a fifth were Tesla Model 3 cars. 

Having said all of the above, the corporation is not the only car manufacturer producing EVs. Its peers have been ramping up production. Larger competitors like VW have launched a series of new models. Even more are in the pipeline. As such, Tesla might have the edge today, but the company’s position in the market is far from guaranteed. That is probably the most considerable risk facing it right now. 

Tesla share price outlook

All of the above suggests to me that Tesla shares could remain a sought-after investment for some time. The demand is there, and as long as the company can increase output to meet this demand, the group’s sales and earnings should continue to grow. As the organisation’s fundamentals improve, the stock should follow suit. 

I think the business has tremendous potential, and it is a leader in the electric vehicle field. However, considering the competitive forces at work in the international car market, this corporation might not be suitable for all investors. But I would buy a speculative position in the company for my portfolio today.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.