As Tesla, Inc. TSLA stock sags, a fund manager re-upped his view that the electric vehicle maker’s next-gen, more affordable Model 2 vehicle could be a “game changer.”
What Happened: “I continue to view a $25K $TSLA $25 “Model 2″ as the game changer that causes ICE competitors to capitulate,” said Future Fund Managing Partner Gary Black. The fund manager said that although he is also confident that Level 4 autonomy could produce a similar impact, he believes the Elon Musk-led company’s unique advantage to mass produce a high-quality $25K EV at a profit will crush ICE viability.
Many companies will stop investing in EVs like how Nokia, Motorola, and Blackberry did when the Apple iPhone took over the handset business, Black said.
Delving into the potential design of the Model 2, the fund manager said it will be “highly attractive.” He said the Model 2 should resemble the Model 3 but be a hatchback and the size of a Toyota Corolla. According to the analyst, this will establish price/value parameters and minimize the cannibalization of Model 3.
See Also: Everything You Need to Know About Tesla Stock
Why It’s Important: Tesla’s volume has sagged this year amid economic uncertainties, and the company’s price cuts since the start of the year have proved inelastic. A cheaper, high-volume car is seen by many as the need of the hour to lift sales, and also cushion may further margin erosion.
Tesla bull and billionaire investor Ron Baron said in a CNBC interview last week Tesla will likely build its $25,000 EV within 18 months. "Wait ’til you see what’s going to happen when all of a sudden they start selling cars, instead of $40,000 a piece, for $25,000 a piece, which is going to happen in about a year or year-and-a-half," he said.
Musk, however, has not committed to a timeline for a Model 2 launch.
The Cybertruck launch, scheduled for the end of November, is the next most-watched catalyst for Tesla. Musk dampened inflated expectations by suggesting on the earnings call that ramping up the electric pick-up truck will be difficult.
In premarket trading on Monday, Tesla stock was edging up 0.07% at $214.80, according to Benzinga Pro data.
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