Bolt Could Steal Some Model 3 Reservations
Perhaps the biggest reason why Tesla investors need to pay more attention to the Bolt is the fact that it started shipping in late 2016, almost a full year ahead of when we expect the first Model 3s to hit showrooms. The first Chevy Bolt shipments are already on their way to California and Oregon. Meanwhile, Model 3 will not start shipping until late 2017 or early 2018, depending on which analysts you ask.
The precise number of Mode 3 pre-orders is not publicly known, though a Tesla fan site has an enigmatic Model 3 counter (2) that places the figure at over 518K. It’s not entirely inconceivable that Tesla might end up losing some of those reservations to its more humble rival, especially if the company continues its long-standing tradition of consistently failing to meet major delivery deadlines. Tesla’s last missed delivery deadline could hurt its Q4 earnings as well.
Tesla Motors Inc (NASDAQ:TSLA) though, has lately been demonstrating that it can meet its aggressive milestones within deadlines. First off, activation of the Gigafactory means the company will be in a position to build battery packs for at least some of the Model 3 reservations. Availability of lithium-ion batteries around the world is quite constrained and can act as a major limiting factor for Tesla, whose goal is to ship 500K Model 3s by 2018. Further, buying battery packs from a third-party supplier would make it hard for the company to sell the Model 3 at 35K without incurring serious losses. Unlike ICE manufacturers, Tesla needs to demonstrate to investors that it can sell its vehicles profitably.
The fact that Tesla was able to double the size of the Gigafactory in just six months offers hope to investors that it’s well positioned to meet its lofty goals.
Investor Takeaway
Tesla Motors Inc (NASDAQ:TSLA) investors should recognize the threat posed by the Chevy Bolt and other EVs from ICE manufacturers. The fact that there’s still quite a lot of uncertainty regarding the exact shipping date for the Model 3 will probably entice some buyers with a Model 3 reservation to switch to the more humble Bolt.
But given the fierce loyalty of Tesla fans, the scale of migration is not likely to be big enough to cause the company any sleepless nights. Model 3 fans placed their reservations knowing full well that delays might occur, and are probably willing to wait for as long as it takes. The good part though is that Tesla has already commenced production of battery packs in its Gigafactory. This removes a major risk for TSLA stock.
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The article Can The Rising Chevy Bolt Dent Tesla Motors Inc (TSLA) Stock In The Long-Term? originally appeared on amigobulls.com. Watch our analysis video on TSLA
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Additional Links:
(1) http://amigobulls.com/articles/tesla-stock-can-gm-and-toyota-hurt-tesla-motors-inc-tsla?&ref=im
