Walter Price, manager of IC Top 100 Fund RCM Technology Trust (RTT), highlights electronic car maker Tesla Motors (TSLA:NSQ) as one of his favourite holdings. He says China is potentially a huge market for Tesla because its government is supportive of electric cars. The company is listed on the Nasdaq Index in the US and trades at around $214 (£128.54) a share.
"Tesla Motors has been a significant holding of RCM Technology Trust," says Mr Price. "Its share price more than tripled during the trust's financial year to the end of November 2013. Tesla has been dubbed the Apple of autos for its ability to design and build high quality, luxury cars, popular with drivers and environmentalists alike. It is expanding into new markets which could support solid growth for some time to come.
"Fitting in with the trust's on going theme of big problems creating big markets, China has a chronic pollution problem. Some 71 out of 74 cities monitored in China over 2013 did not meet state environmental standards according to the country's Environmental Protection Ministry. As a result, China is potentially a huge market for Tesla: the Chinese government is very supportive of electric cars and is likely to encourage their widespread adoption.
"In the meantime, the group is investing around $2bn in a factory to help it produce cheaper batteries for a mass market electric car within three years, having focused exclusively on the luxury market to date. Again, this could be transformative for the group. Not only should it allow it to penetrate new markets, but also to improve production times for its existing range.
"Controversy has centred on Tesla's valuation and the shares have undoubtedly had an astonishing run. This led us to take some profits, but Tesla's recent success in China and longer-term prospects with its mass market electronic vehicles has led us to maintain it as one of the top 25 positions in the trust."
