Tesla Motors (NASDAQ:TSLA) is here to stay because its appeal transcends class, gender, or race in a sharp contrast to what detractors might think. A research note released by Dan Dolev, an analyst at Jefferies shows that millionaires are not the only people driving Tesla’s EVs. Drivers of Tesla’s EVs cut across a wide range of economic demographics to suggest that Tesla is on the path to widespread adoption.
Highlights of the report include insight from the responses of 145 Model S owners in a survey. About 70% of people that drive a Tesla made the switch from cars that have price tags below $60,000. The top 20 cars running on gasoline that these people considered before they opted for Tesla had price tags below $60,000. Dolev was quick to note that “on average, owners were willing to pay 60% more for a Tesla”.
Secondly, 85% of the drivers said their next car purchase would certainly be for a Tesla. 83% of them said they would recommend Tesla to family and friends. 25% said they won’t even think about other brands for their next car purchase.
Thirdly, buyers of the EVs do get $7,500 in tax credits when they buy a Tesla. However, 89% of the drivers said that they would still buy a Tesla even without tax credit incentives. 65% of the drivers said they wouldn’t have bought a luxury car if they had not bought a Tesla. All in all, Tesla Motors drivers were content to shell out a 60% premium on the Model S than for other brands.
News broke yesterday that drivers of Tesla’s Model S had collectively driven their cars for more than 1 billion miles. 1 billion miles is the same as 4,186 trips to the moon. This report by Jefferies confirms yesterday’s assertion that Tesla owners love their cars. In fact, the report echoes yesterday’s bullish sentiment that “Teslas are not just status symbols, signs of ostentation, or the latest fad for those with deep pockets“.
Strong Bullish Sentiment
Following the strong brand loyalty that Tesla enjoys, analysts now have a stronger bullish thesis on the stock. Dolev has increased his 2020 production estimates to 515,000 cars ahead of Elon Musk’s forecast of 500,000 cars. He raised his 2016 and 2017 revenue estimates from $9.26B and $12.82B to $9.27B and $12.82B.
He also maintained his “Buy” rating on the stock. The price target was also increased from $350 to $360. Jefferies also thinks that Tesla’s total addressable market could expand by as much as 75% in the next 5 years.