Ignore the Naysayers and Buy Tesla

Tesla (TSLA) shares have rallied hard over the last few weeks despite being targeted by the likes of Citron Research. After being down almost 3% after Citron tweeted that it has shorted Tesla and expects shares to fall to $100, the stock has shrugged off the naysayers and has continued its upwards trajectory. The Tesla rally is likely here to stay as I expect the stock to continue moving higher.

100 kWh battery pack

In 2015, Tesla Motors introduced its 90 kWh battery pack, but the company plans to launch a new 100 kWh battery pack this year.
The 90 kWh battery pack option was available for around $3000, proposing an additional 5 kWh that would escalate range by about 6 percent related to the 85 kWh battery pack. This additional 5 kWh is enough to run Model S nearly 300 miles of EPA-rated range.

However, in the beginning of this year, the company discarded 85 kWh battery pack option regarding new orders and updated its Model S options to 90 kWh and 70 kWh. The same options are available for Tesla’s Model X. Even though the price does not vary, and the upgrade charge is $13,000.

For Tesla, a 100 kWh battery would be an exciting technical accomplishment in itself. Tesla has said that it will enhance performance of 5 percent to 7 percent every year, but a 100 kWh battery pack will lead to 11 percent enhancement in capacity compared to the 90 kWh battery pack.

This step indicates that Tesla is enduring to magnify its battery performance strategy. At present, Tesla’s primary focus is not on more performance or more range, but on cost. Tesla is trying hard to reduce costs, so as to make the $35,000 Model 3 feasible.

Model 3 plays an important role in Tesla’s growth story, as it features next generation Tesla technology. Its size is same as that of Audi’s A4. Tesla’s Model 3 will be available in the market in late 2017, but the model design will be revealed on March 31 2016.

Elon Musk confirmed that Tesla is still on schedule regarding production and the deliveries of the Model 3. The company will start doing reservations in stores on March 31. A $1,000 deposit will be required to book vehicle. Tesla’s Model 3 will be priced considerably lower than its Model X and Model S, and the company projects yearly bookings of around 80,000 to 90,000 this year.

Conclusion

As long as Tesla manages to deliver strong year over year revenue growth, shares of the company will continue moving higher.  Despite the recent attack by Citron, I think Tesla will manage to deliver on its Model 3 promises, which will considerably boost its sales going forward. Hence, I think Tesla still has room to run, making it a good pick.
Published on Mar 10, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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