Without making any judgments regarding valuation, watching Tesla’s stock rise is simultaneously encouraging and a bit concerning because of what’s not being talked about.

First of all, it would be great to see Tesla succeed. According to Stax’s analysis, EVs should not only deliver significant value to U.S. consumers who drive them, but also improve return on capital for existing utility infrastructure because we’d buying more electricity – that is, domestic fuel that can reduce our trade deficit significantly. The US would capture a lot of profit from the fuel alone. But it could also create a lot of value for smart industry players in the middle. And you gotta appreciate an entrepreneur going against the usual grain, not to mention that they’re good looking cars getting very positive reviews.

Hopefully the recent investor focus on the company will bring more attention and innovation to unlocking the potential in electric vehicles (EVs) for the U.S. But reading the commentary on the company, I fear investors are missing core issues around market constraints and, in the process, missing the chance to invest and innovate in unlocking all of this value. If investors and entrepreneurs knew more, we’d see more financial and business innovation driving electric-vehicle or two-fuel-vehicle adoption, along with a lot of profits domestically.

The same analysis I published two years ago with former Federal Energy Regulatory Commissioner Nora Brownell still holds true in most of the country. Our article “Killing the Electric Car … Again!” in the electric-utility trade journal Spark Fortnightly quantifies the opportunity in New York State as a proxy, EVs at that time cost about one-fifth per mile to drive as gas-powered vehicles. With gas prices 30% higher today, that spread will be even wider. That kind of savings over time would quickly pay for any upfront premium for an EV model over a comparable conventional vehicle. Beyond putting money back in owners’ pockets, these vehicles would lessen U.S. demand for foreign oil, reducing our trade deficit, as mentioned earlier. And with lower emissions, they’re good for the environment.

Many of the same speed bumps we wrote about then remain in place today. There still is basically no electricity market for transportation. Utilities certainly have incentive to build one. They’ve put in place an infrastructure to handle peak demand, which leaves them much unused electric capacity the rest of the time, particularly in overnight hours. Currently, electricity provided during this time is highly discounted. There would be ample opportunity to provide this to EV owners, at well above the usual low-usage rates, if not the full daytime rate. For a typical utility, that could deliver massive gross profit, often in the tens of millions of dollars. Those dollars could pay back shareholders and reduce utility bills of the local residents who pay in to guarantee capacity. It can also provide a substantial new market for the electric utilities, which have typically been lagging GDP in terms of growth.

However, current regulatory structures provide a disincentive for utility management to invest in building this market because risk is asymmetrical. The utility alone bears the risk of system overload from the increased demand. But, while regulation varies from state to state, the potentially lucrative profits would typically all be returned to current utility customers through established cost-plus rate-setting mechanisms. From utility management’s point of view, it’s a lose/no-win situation.

EVs and dual-fuel options should be a huge money maker for everyone from consumers and businesses utilizing the transportation, to the smart auto companies, utilities and financiers that invest in them. In fact, this is one of the areas we’re looking at in our Stax DevCorp business incubator. But this is an industry with many nuances that need to be navigated.

This industry needs more people getting under the hood of the entire industry – not just under the hood of one stock price. With a few tweaks, these vehicles will be roaring down the highway, even if the engine noise is artificial to make us feel better.

–Rafi Musher