Tesla Motors Inc (NASDAQ:TSLA) has a huge fan base. But in the past, the company has not converted all its fans into customers. This time, though, things could be different. The unveiling of the Tesla “Model 3” just might be able to spark another rally in TSLA stock.
Tesla Model 3: A Huge Catalyst for Tesla stock?
In 2015, Tesla delivered a record-high 50,580 electric vehicles (EVs). (Source: “Tesla
Barely Hits Q4 Goal Amid Cautious Start for Model X,” MarketWatch, January 4, 2016.) On its own, the number looks good, as it is a significant improvement from 2014. Moreover, when you compare Tesla’s “Model S” to other EVs, it also stands out in terms of sales.
But if you compare Tesla to mainstream automakers, you’ll see that Tesla isn’t really on the same scale. Given the company’s huge following around the world, why can’t Tesla be as huge as companies like BMW or Ford?
Well, production capacity is one thing, but things are improving there. Tesla recently showed off construction progress of its main battery production plant, dubbed the “Gigafactory,” in Nevada. Management believes that production at the company’s new Gigafactory would reduce battery pack costs by more than 30% and boost production speeds. The giant factory is critical to Tesla’s goal of making 500,000 cars by the end of this decade. (Source: “Tesla Officials Show off Progress at Gigafactory in Northern Nevada,” Las Vegas Review Journal, March 18, 2016.)
Demand is another big issue. You see, while many Tesla fans want a Tesla, not all of them can afford one. In fact, most of them can’t. Tesla’s first model—the “Roadster”—started at more than $100,000. The Model S sedan and the “Model X” SUV have less expensive starting prices, but after adding a few options, their prices could still easily top $100,000. In fact, the “Signature Series” of the Model X starts at a whopping $132,000.
To reach a broader audience, Tesla needs a mass market car. Luckily, it’s right around the corner.
Tesla is unveiling its mass market EV—the Model 3—on March 31. The car will start at around $35,000 before government incentives. If you get the $7,500 federal tax credit in the U.S., the base model could cost you less than $30,000.
Production of the Model 3 won’t begin until late 2017. But if you want one, you better order early because even before seeing what the car looks like, many Tesla fans are already willing to take out their wallets.
While you can reserve a Model 3 online, visiting a Tesla store “will allow you to get a better spot in the queue,” says Tesla. (Source: “Reserving Your Model 3,” Tesla Motors Inc, March 24, 2016.)
In order to get the Model 3 as soon as possible, Tesla fans are converging on Tesla stores. One person even compiled a Google Docs list to see who will be heading to each store and at what time. The document also shows what kind of options they want to get on their Model 3. From what I see, the first bunch of Tesla Model 3s will be loaded with options when they leave the factory.
The Bottom Line on TSLA Stock
Of course, there would still be concerns surrounding the Tesla Model 3’s production. But there were similar concerns with production of the Model S when it was first introduced. And as years went by, the Model S turned out to be a huge success. Today, Tesla has more experience addressing those concerns.
There you have it. The stock market may go up or down and it will certainly affect TSLA stock. However, as a company, the future of Tesla is undoubtedly bright.