For Immediate Release
Chicago, IL – April 13, 2018 – Today, Zacks Investment Ideas feature highlights Features: Tesla TSLA, FedEx FDX,United Parcel Service UPS, WalMart WMT andPepsiCo PEP.
Sorting Out What Lies Ahead for Tesla, part 3
Read part 1 here, read part 2 here
Everyone knows Tesla makes battery-powered electric automobiles, but many are unclear about the entire range of products currently offered or coming soon from the alternative energy pioneer. So, to better understand what to expect from Tesla in the future, let’s take a look at the entire line, from the very beginning.
Tesla’s first automotive product offering, the original Roadster hasn’t been offered for sale in almost 6 years, but its development, design and sales strategy are informative in terms of the company’s general philosophy.
From inception, the Roadster was a technological marvel. Fully electric and blindingly fast (0-60 in less than 4 seconds), it made a big splash on the world stage, putting Tesla on the map as a serious automaker.
Built on a Lotus chassis that Tesla contracted to buy only 2,500 of, 2450 Roadsters were sold to the public worldwide. Most importantly, Tesla used the proceeds from selling the Roadster at $130k to finance the development of their next, more mass-market car, the Model S.
2012-Present Model S
The current Model S is what most people mean when they say “Tesla”, at least until recently. Sleekly styled, with a simple yet futuristic interior and superior performance, it was an immediate hit, proving Tesla could build a true mass-market automobile. Within 6 months of its introduction, Tesla was selling 5,000 Model S cars per quarter. Bolstered by its reputation for efficiency, performance, comfort and especially status, that sales figure was north of 10,000 cars/quarter by 2015. Production has stayed steady ever since, flattening out between 11,000 – 15,000 cars per quarter. Upgraded Model S versions with longer range per charge, better performance, and features like AWD and Autopilot self-driving assistance system have kept demand strong – and also prices high - with top end models exceeding $130,000.
2015 – Present Model X
With a nearly identical platform to the Model S, but with a roomier SUV body, a hatchback and futuristic falcon wing doors (your kids can literally not bang the car next to you in a parking lot), The Model X is Tesla’s answer to the high-end BMW, Mercedes and Lexus luxury SUVs. It has nearly the performance of the Model S, but with space for five, six or seven passengers, depending on how the buyer chooses to configure it. The Model X sells in just slightly lower numbers than the popular Model S, (10.070 in Q1 2018 vs 11,730 for the Model S) but fills a niche in the high-end energy efficient SUV market. Similar to the Model S, the Model X starts at $79,900, but well optioned versions can easily hit six figures.
2016 – Present Model 3
The Roadster, Model S and Model X have all been very expensive autos. For Tesla to succeed in the mass market, they had to make a car most people could afford and they had to produce it in large numbers. The average new car in the U.S. costs $35,000. It’s probably not a coincidence that when Tesla debuted a prototype of the Model 3 in March of 2016, the price point they announced was…you guessed it…$35,000. Upgrades and options are expected to take the average Model 3 closer to $45,000, with some versions topping $50K. They immediately took 200,000 orders (accompanied by a deposit of $1,000 for each car.) At least 200,000 more followed in the meantime. That’s $400M in cash added to the balance sheet for the notoriously cash hungry company. As we discussed in part 2 of the series, financially, the Model 3 is a make or break product for Tesla.
In November 2017, Tesla unveiled the long-rumored new generation Roadster. Not due for delivery until 2020, this new supercar will be the quickest car ever made, going 0-60 mph in under 2 seconds and topping out at 250 mph. It has a range of 600 miles. And it has 4 seats! Though the Roadster will likely not be produced in great numbers, especially with a price tag north of $200K, it signals Tesla’s willingness to continue to push technological limits – advances that are likely to trickle down into the mainstream vehicles, just as the original Roadster spawned the Model S.
Tesla is taking $50,000 deposits on the new car and offering the first 1000 produced to those who pay $250,000 up front and wait two years for delivery. Though they haven’t released specific reservation data, it’s clear this is an attempt to acquire some (interest-free) cash to use for more immediate operations in the meantime.
At the same November 2017 press event, Tesla also introduced a new semi truck. Aerodynamic, with a single driver cabin, its four electric motors will take it 500 miles on a charge, and it promises to save owners $200,000 in fuel costs over its useful life. Tesla itself will be the first users of the big rigs, using them to transport parts from the Gigafactory in Nevada to the Freeport, CA manufacturing facility. Over 250 pre-orders for the Semi have been taken (with $20,000 deposits on a vehicle that will cost upwards of $200,000.) Orders are already rolling in for the first production models from the likes of FedEx, United Parcel Service, WalMart and PepsiCo . Tesla said in a recent press release that they are using input from the companies that have placed early orders to design features for the Semi.
Nothing has been officially announced, but it’s widely rumored that Tesla has begun shopping for supply contracts for another new vehicle codenamed Model Y. Speculation has it that the Model 3 – level compact SUV will go into production late in 2019.
After acquiring Solar City in 2016, Tesla has produced innovative solar energy production and storage devices, primarily for the consumer market, but also doing large scale municipal projects as well – building the world’s largest battery array in Australia in December 2017. Their premium products include a solar roof which resembles conventional tiles but that are actually photo-voltaic cells, and the Powerwall, a home energy storage device that allows users to store the electricity produced by rooftop solar and use it at night or when the sun is otherwise not shining. The Australia project was essentially a networked version of the Powerwall technology referred to at the Powerpack which allows large energy producers to store excess energy and release it during periods of high demand, alleviating the need to spool up coal fired power plants and preventing interruptions in service.
It’s easy to see how Tesla’s plans fit together, with energy efficient cars and trucks than span the range from mid-market to ultra-high end, electric semi trucks for large scale transportation and shipping and solar power generation and storage solutions to power it all. What remains to be seen is whether they can actually execute the production of all these aggressive offerings. So far, they’ve missed nearly every production goal they’ve ever set, with Musk even referring to Model 3 headaches as “production hell.” They’ll need to make some major changes soon to bring all these big ideas to life.
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