Even Stanley is wrong on this one

Stanley who? Morgan Stanley. The company’s press-friendly and generally Tesla-friendly analyst, Adam Jonas, seems to think gas prices will:

1. Stay recessed for years
2. Hurt desirability of the Model 3

Never mind the first one. It doesn’t matter, because he’s dead wrong on the second one. We’re not talking Nissan or Toyota here. Tesla sells excitement, not mathematical formulae. Excitement doesn’t chart well, but it’s exactly what makes Tesla immune to ROI concerns. It ensures the company’s success in any segment it chooses to attack. Yes, saving money on gas is a nice bonus — a cherry on the cake — but the cherry can shrink by 25 percent without ruining the cake, assuming the cake is really good in the first place. So how good are Tesla’s cakes?

Roadster: Simple, potent, proved EVs are exciting. Mission accomplished. Cleared the way for . . .

Model S: Proved EVs have mainstream appeal and are demonstrably better than gas cars. Also, showed the world that Tesla continually improves its products. Compare the new P85D to the original Model S, launched just two and a half years ago. The new recipe is far better, true? Better seats, better onboard tech, better acceleration, better traction, better warranty.

Model X: Sold out for a year. Sight unseen. Price unknown. A home run out of the stadium and into the center field parking lot. Undoubtedly will see similar improvements during its lifespan, so the 2018 version will obliterate the first version. Model X street presence will transform Tesla from a potentially great brand to brandus magnus.

Which brings us to . . .

Model 3: Never mind the Model 3 we’re imagining. Never mind the Photoshopped renderings showing a stubbier Model S. Even the Model S won’t look like the Model S much longer. Tesla will have more self-confidence when it’s time to pen the Model 3 and will likely push the styling envelope. Also, the company surely will discover some other James Bond trickery to throw in, tantamount to the powered door handles in the S and falcon wings in the X. Musk is a real-life Q, you know. By the time the Model 3 is built, Tesla’s excitement factor will have people wanting a Model 3 whether they’ll save $2,234/year in gas money or $229/year in gas money. Considering it a mere BMW/Audi/Benz/Lexus challenger, with a gas waiver thrown in, is naive. Consumers will have a choice between:

1. A Tesla, by this point representing the exciting new automotive status quo.
2. The other guys, representing the unexciting status quo ante.

The price of crude oil can go screw itself. Tesla is immune now and will stay immune through Model 3, unless Elon starts a new habit of leaving the office early, going home, knocking back a few, grabbing the clicker and konking out on the couch.

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8 thoughts on “Even Stanley is wrong on this one

  1. theschnell says:

    Right On! The only question is whether they can get all the ducks in a row to build the model 3 fast enough. I think they probably can, but Model X is making me a little nervous, despite the fact that I believe part of the delay is strategic rather than purely logistical, but still, it has been a long wait. I hope model 3 ramps up much faster or else I and many others may loose patience.


  2. Thanks Teslamondo. You have a way of putting things in their proper perspective. I’ve lost count of the number of times Tesla have proved their critics to be ridiculously incorrect.


  3. Dave B says:



  4. BEP says:

    There is one thing I think we should not overlook: Roadster, Model S, and Model X, are toys for rich people. Tesla can afford putting magic handles and magic doors on them because they are luxury car. Model 3 won’t be a luxury car. It’s more difficult to give something the “wow” factor if you are trying to do an affordable product. The more hype they are building up now with the current luxury models, the more people could be disappointed by the “Tesla for the masses”. I hope they will be able to surprise us yet again in 2017 (or 2018, or 2019, …).


  5. Jonas says:

    I did read Stanley’s note and I had the exact same thoughts. I believe lower gasoline costs are not going to bring significant decline in Tesla sales. Tesla offers way more than gasoline savings. Actually it could help. Likely competitors like Nissan, BMW, GM may be the ones decreasing investments on electric platform. In addition, environment concerns will continue to make many people pursue Tesla cars.


  6. Rob Vestrum says:

    Yes, BEP, the models so far are for people who rich people, which is the genius of the plan: Get the toy buyers to fund R&D by starting with the least practical toy and work downward towards higher value for money, which is the Roadster—Model S—Model X—Model 3 progression.

    As for an affordable “wow” factor, some of us are old enough to remember the coolness of the Volkswagen Beetle, which was a design triumph for both charm and economy, so we can image that Tesla will come up with some revolutionary design that will be awesome, practical, and affordable.


  7. […] pounded the table and decreed that Tesla would flourish despite cheap gas because it sells excitement first, safety second, green cred third, and return-on-investment […]


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