This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Getting Tesla Wrong

Stock quotes in this article: TSLA, GM

2. Battery size mix

Tesla said that less than 10% of orders are for the smallest battery, the 40 kWh. It also said that more than 50% of orders are for the largest battery, the 85 kWh. Somewhere in-between are sales for the 60 kWh battery.

Think about this for a second. The pundit-sphere is filled with arguments that Tesla makes a product that's too expensive, and that the pressure is for the car to become cheaper.

The evidence shows otherwise. The overwhelming percentage of sales is for versions starting at more than $80,000, with recent averages near $100,000. The demand for Teslas below the $70,000 mark is basically tiny.

Market Segmentation and Focus

This leads us to a critical mistake made by almost all Tesla analysts. The critical flaw is that they tend of think in one of the two following terms: "Tesla is a play on electric cars" and "The car must be good enough for most or all people."

First things first: Tesla is NOT a play on electric cars. Tesla IS a play on "extreme performance cars that fit 5 adults and gigantic luggage."

There are plenty of different kinds of electric cars in the market. Not all of them have done as well as Tesla, and these discrepancies will be a lot clearer in 2013.

To believe otherwise is to claim that a Porsche 911 is a bet on the car market. A Porsche 911 is a lifestyle purchase, alternatively an extreme performance car. It's a toy, a mid-life crisis pill. A Porsche 911 is rarely taken on a road trip. How many people do you know who has taken their 911 on a 200-plus mile trip, ever?

Likewise, the Tesla is a lifestyle purchase. What kind of lifestyle? Who cares? Different people have different motives. Some people are just techies. Others want a silent car. Many want a uniquely fast car. Others want one-pedal driving. Misguided souls think they are saving a lethal polar bear.

The point is this: There are millions of people around the world who are on their third or fourth Mercedes S550 or BMW 750. They're up for renewal, and they're bored. Another three years, another same car AGAIN?

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,804.71 -238.19 -1.40%
S&P 500 1,946.16 -26.13 -1.32%
NASDAQ 4,422.0850 -71.3050 -1.59%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs