Company Discontinues Cheapest Models Ahead of Model 3 Launch

Remigio Civitarese
Marzo 21, 2017

Tesla has announced an end to sales of the Model S 60 and 60D variants.

Just nine months ago, the brand said demand for a cheaper gateway to Model S ownership had forced its hand but now, just nine months down the road, we're being told buyers didn't take to the vehicle. Back in October, we reported on Tesla reaching the 3 billion electric mile milestone and the company's global fleet has managed to add 500 million in less than 3 months - bringing the total to 3.5 billion in December.

He believes the EV maker is targeting a 25% gross margin for the Model 3 with 90,000 to 100,000 cars per quarter, a level which matches free cash flow breakeven, he adds. Analysts forecast that Tesla will post ($1.42) earnings per share for the current fiscal year. This capital raise is meant to "de-risk" the company's financial condition as they focus on getting the Model 3 into production this year. The Model S is the lowest-price model of the electric sedan now available, starting at $68,000.

Another possible reason for the move is because of the upcoming Model 3, which Tesla is marketing as the company's most affordable electric vehicle (that will be) in production. If they wanted more, they'll have to fork out $9,500 for an upgrade. Tesla says that demand for these models is low, and most customers skip them in favor of the more powerful 75 models with longer range. It also offers Model 3, a sedan designed for the mass market.

So, that means if you picked up a 60 or 60D you were probably struggling to get into the vehicle at all. However, other automakers don't do this.

The Seeking Alpha contributor feels that the company's chances of declaring bankruptcy have increased "exponentially" with this latest capital raise because he doesn't think it will be enough. To meet that target price, Tesla is building a massive battery-production plant in Nevada, in partnership with Panasonic.

Tesla Motors, Inc. stock performance trend indicates that the stock price has rallied 22.57% in the past 12 Weeks, but analyzing the 6 month charts for the stock, the price continues to stay positive and keep the rally at 28.17%.

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