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Tesla Optimism Makes No Sense, Writer Says

Tesla Optimism Makes No Sense, Writer Says

Tesla Motors Inc (NASDAQ: TSLA)'s stock is on a tear in the past month, rising more than 42.9 percent. However, according to Business Insider transportation expert Matthew DeBord, Tesla investors are making a big mistake when it comes to the outlook for the coming Model 3.

“This is the notion that the arrival of a $30,000 all-electric car in a market dominated by gas-burning vehicles will be the disruptive-innovation earthquake we’ve all been waiting for,” DeBord explained.

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DeBord believes that Tesla will not (initially at least) have as wide of an appeal in the marketplace as many supporters believe. He argued that the massive demand for Japanese model automobiles in the United States, including Honda Motor Co Ltd (ADR) (NYSE: HMC) Accords and Toyota Motor Corp (ADR) (NYSE: TM) Camrys, has to do with drivers’ practical demand for affordability, convenience, safety and fuel efficiency. It has nothing to do with an idealistic belief in the transition to alternative energy.

“Anyone shopping for, say, a Honda, Toyota, Nissan, Mazda, Subaru or for that matter a Kia, is unlikely to have Tesla on his or her radar,” DeBord explained. “Given the miserable sales that traditional automakers have seen with EVs, it will be up to Tesla to prove that the market exists.”

Tesla plans to unveil its new Model 3 at the end of the month.

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

Latest Ratings for TSLA

Jul 2019ReiteratesUnderweight
Jul 2019MaintainsBuy
Jul 2019MaintainsNeutral

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

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