Range, Battery Cost Issues Virtually Solved.
German Introduction Will Test Tesla To The Limit Though.
While BMW was finally jumped into the battery car area with the unveiling its i3 electric car, Tesla Motors continues to bask in the admiration of investors.
Deutsche Bank has joined the list of fans and recommends its clients buy Tesla shares, saying it is well on the way to solving key driving range and battery cost disadvantages with the Model S.
“Tesla has already largely eliminated the range issue and we now believe the Gen3 can fully close the cost gap while generating 25 per cent gross margins,” the bank said in a report.
Tesla has said it will launch its mass market “Gen III” vehicle before the end of 2016, at a price equivalent to the current Nissan Leaf. That would be about half the price of Tesla’s first car, the Model S, which starts at $62,400 after the $7,500 government tax credit. Before Gen III. comes the Model X SUV which is based on the S. The Gen III is expected to launch with initial sales of 30,000, ramping up to 370,000 by 2025.
Model S volume is expected to peak at 26,000 by 2017, the Model X should hit 20,000 to 25,000 as an SUV, light-duty delivery van and pickup truck.
“We’re now more comfortable with the risks, given continued stellar reviews, still-rising U.S. order rates, and aggressive roll-out of an exclusive fast-charging network that has potential to expand its competitive advantage,” Deutsche Bank said.
Launch in Europe
Other investment banks have been jumping on the bandwagon and leading an acceleration in Tesla’s share price from $32 to $129.90 in the six months to July 15. The price dived nearly $20 when Goldman Sachs had some negative comments in mid-July, but by the end of the month the share price had returned to close to $130.
The Tesla Model S is shortly to be launched in Europe, where it faces its sternest test because sports car drivers expect to be able to cruise at high speeds on German autobahns. This aspect of the Model S battery power has not been fully tested in the U.S.
Tesla does have its critics.
Professor Willy Shih of Harvard Business School told Business Week magazine that he is skeptical of electric cars and of Tesla’s chances of building the charging and battery-swap facilities, because Tesla relies on much immature technology.
“As a result, they’re at the expensive end of so much new technology. It’s a very costly and challenging proposition,” Shih said.
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