Post Tesla Motors Inc (NASDAQ :TSLA ) unveiling event, Morgan Stanley analyst, Adam Jones, compares Tesla’s latest cheaper Model 3 to Model S. Sharing CEO Elon Musk’s confidence in the new electric vehicle (EV), he feels that Model 3 is better for four reasons.
Firstly, limited disclosure of Model 3’s specs indicate possible holding back of information to avoid cannibalism of Model S’s market. The event mainly shared headline numbers to excite customers (0 to 60 within 6 seconds, 215 mile EPA range etc.) This detail is enough to ensure a more dynamic driving experience. Musk stated, “You will not be able to buy a better car for $35,000, even with no options” and assured it will be one of the safest cars around the globe.
Secondly, the doubling of stores and superchargers in the upcoming 12 months hints towards a ‘master plan.’ Instead of plain sales volumes, this move could work on to build an autonomous EV transport network. Tesla’s apparent marketing expense for now, offering free-charging and more, may become a service-based source of revenue as it grows into an ecosystem.
Also, probably the fastest flooding of orders was witnessed in the auto market as the preliminary order bookings crossed 100k mark within 24 hours. By the end of the event, 140k units had been reserved after an evening full of test drives. Although this booking is based on a fully refundable deposit of $1000, the numbers are commendable. Considering Morgan Stanley’s 2020 forecast for Tesla’s completed unit delivery for Model S, X and 3 being below 249k (less than half of Tesla’s own targets,) this order booking is an overachievement.
Lastly, these order booking numbers signal more than anticipated forward demand. Investor sentiments are running high and coupled with encouraging initial authorized magazine reviews for Model X, this trend may turn the fate of Tesla. This event seems insignificant in sight of company shares of $30bn absorbing financial losses. However, this momentum if maintained in consumer demand may drive in more investors as the cash flow turns green and Tesla business ambitions are met.