Tesla Motors, Inc has a habit of frustrating its adoring fans and then, almost without warning, delivering way more than they expected. Owners (and would-be owners) describe their relationship with the company as a roller coaster ride that compares to being stuck in traffic and then being left breathless as they are launched to 60mph in 2.8 seconds (Ludicrous mode!!). So far though, it only delivers frustration to its competition.
Tesla has time on its side
The competition has a serious problem. Tesla Motors has a time advantage that will be difficult to overcome.
BMW, Audi and Mercedes-Benz have plans to release EVs that will compete with the Tesla Model S and Model X. The mix will include luxury sedans and SUVs. They’ll all deliver a range of 250 plus miles – just like Tesla. And they will be priced similarly, starting at around $70,000.
A huge problem for BMW, Audi and Mercedes-Benz is that their plug-in EVs won’t reach showrooms for several years. By then, Tesla will have introduced its more affordable Model 3 which has a target price of $35,000 – and that’s before incentives. It’s clear that Tesla’s competitors have a time challenge that they will have to work hard to overcome.
Battery tech is key to to success of the company and Tesla has a time advantage here as well. The $5 Billion Gigafactory is currently under construction in Nevada. It will produce the batteries for future Tesla EVs and the Powerwall home battery system. Tesla is making a big bet with the Gigafactory. The company hopes to drive down the costs of batteries allowing it to gain an even larger advantage.
Tesla owners swear by the company
Tesla has done an excellent job of pleasing its early adopters. Owners of Tesla EVs swear by the car and the company. There have been some hiccups like the company’s seeming change of heart regarding local Supercharger use or requiring an expensive upgrade for P85D owners to add Ludicrous Mode to their vehicles. Even those with large deposits on their Model X‘s seem generally unfazed while enduring a longer than expected wait for the car to reach production.
Tesla has done an excellent job of pleasing its early adopters. Owners of Tesla EVs swear by the car and the company. There have been some hiccups. The company seems to have had a change of heart regarding local Supercharger use.
It’s requiring an expensive upgrade for P85D owners to add Ludicrous Mode to their vehicles. Tesla owners have generally given the company a pass when it has fumbled. Even those with large deposits on their Model X‘s seem generally unfazed while enduring a longer than expected wait for the car to reach production.
The reason for this loyalty is owners (and future owners) of Tesla Motors vehicles are convinced they are getting a wonderful car and that no other company can deliver anything that compares. So far they are right.
Just last week Consumer Reports ranked Tesla Model P85D higher than any car in history – 103 on a scale of 100. This supports the idea that Tesla owners are more than pleased their purchase.
The company is attractive to investors who have bought into the long range vision of the company. The stock has proven to be resilient. Last week, as the markets in general were pounded, Tesla stock sank along with everything else but was among the first to recover value. The firm was up over 25% in just a few days.
Tesla has just about eliminated “range anxiety”
The ever expanding network of Tesla Superchargers and some recent navigation software updates have virtually eliminated “range anxiety”. The term refers to the feeling drivers of EVs can get when they’re not confident they can make it to their destination before their battery runs out of juice.
For everyday driving Teslas are meant to be charged at home but when drivers hit the road for a long trip Superchargers are the super-fast charging solution provided by Tesla. Currently, there are 502 Supercharger stations with 2,832 Superchargers. They are placed strategically all over North America, Europe and Asia Pacific. Use of Superchargers is free making them a valuable perk for Tesla owners.
Buying a Tesla is easy
Tesla has changed the way we buy cars. Buying a Tesla is a simple online process. Go to their website and build your car in the Design Studio. Designing your car requires selecting a color and options and placing a deposit. If you’d like to test drive a Tesla first, you can head over to one of the small showrooms commonly located in shopping malls.
What you won’t get when you buy a Tesla is the car buying experience we’ve all become accustomed to. The Tesla sales process entirely bypasses the need for dealerships. There are no auto malls or car salesmen to deal with. The Tesla approach to selling cars is enjoyed by buyers but it’s raising huge concerns among traditional auto sales organizations. Tesla faces legal challenges from state auto dealer associations in the US and is making a habit of winning those battles.
Tesla has Elon Musk
Tesla CEO Elon Musk gives the company something else that other automakers don’t have. Musk is relatively new to automobile manufacturing and he’s not hung up by the same limitations of seasoned leaders in the auto world. Musk has created a company that operates outside industry norms and he’s disrupting the way the automobile industry works.
When Musk introduced his plans to build 100% plug-in EVs, the smartest and most experienced automotive execs in the world wished him luck while in the same breath were saying “he’ll need it”. So far, he’s had it.
David Goldstein was long TSLA at time of writing, but positions can change at any time.
Disclaimer: The above should not be considered or construed as individualized or specific investment advice. Do your own research and consult a professional, if necessary, before making investment decisions.