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Tesla Inc.'s move to a low cost model 3 sedan before launching the $ 35,000 version of the Chief Executive Officer Elon Musk has been promised to be the president of the company, "damned if you do, damned if you do not," an analyst said Friday.
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TSLA, -1.48%
$ 25,000 Thursday, $ 4,000 cheaper than the previous lowest price on the Musk has been promised at the mass market. Musk pointed out that it would cost $ 35,000 after tax incentives (in California, at least), but the federal tax credit will begin at the end of the year.
$ 35k after federal and state tax rebates in California, but true cost of ownership is closer to $ 31k after gas savings
– Elon Musk (@elonmusk) October 18, 2018
In a Friday note, Bernstein analyst Toni Sacconaghi wrote that the unexpected is a bit cheaper than the high-end Model 3 but is still about 30% higher than the promised base price shows the issue with Musk's promised price tag. In hindsight, the analyst wrote, Musk probably should not have made the promise.
"In retrospect, it is unclear whether or not Elon Musk should have promised $ 35K Model 3," Sacconaghi wrote. "The car is years ahead of its peers, and would likely have a huge following along with a tremendous consumer following, even with a basic sticker price of $ 40K or $ 45K."
By promising that price, Musk now faces $ 35,000 worth of sales, as it is said that it will not be profitable enough to pay for it, Sacconaghi wrote.
"In some senses, Tesla may be damned if you do," commented the Bernstein analyst, "who has a market performance rating and $ 325 price target on the stock. Model 3 in early 2019 as CEO Musk has stated, and is likely to be pressured, perhaps materially. On the flip side, if Tesla chooses to delay the introduction of the base model, or make it available on a limited basis.
Tesla shares were trading 2.5% lower with an hour to go in Friday's trading session. The stock has declined 17.4% so far this year, as the S & P 500 index
SPX, -0.04%
has gained 3.6%.
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