Stifel Positive on Tesla (TSLA) Following 'Roadster 3.0' Announcement; Doesn't See Fuel Prices as Big Issue

Stifel is out with commentary on Tesla Motors (Nasdaq: TSLA) following the company's "Roadster 3.0" announcement today. The firm has Tesla with a Buy rating and $400 price target.

Analyst James J. Albertine made the following points:

• Thoughts on competition, Tesla Roadster EV range development. Our confidence in TSLA as a disruptive manufacturer, which underpins our $400 target price and positive outlook, is largely predicated on the lack of competition for a luxury EV. As it relates to commentary suggesting peer EV entrants for the 2017-18 model year, we view this as a positive attestation of TSLA's "runway"; by the time competitors roll-out a 250-mile range EV, TSLA will likely have improved range, can leverage its head-start with respect to testing/production/quality controls, and will likely remain a leader from a distribution perspective as traditional dealers do not appear eager (at the ground-level) to sell EVs, in part given uncertainty related to service needs longer-term. We believe the announcement of a 400-mile range Roadster is also a subtle hint at TSLA's development of longer range battery packs for its Model S/X, but perhaps most critically, the Model 3, hinting at TSLA plans for generating 250-300 miles of range from a physically smaller battery pack.
• Desirability of electric vehicles in a low gas price environment, which we believe underpin broader questions related to demand. We agree, broadly speaking, more fuel efficient vehicles tend to lose share relative to less fuel efficient vehicles in a low gas price environment, but would offer a few considerations. First, TSLA's Model S sedan, priced between $100-115k per unit on average, suggests TSLA customers are perhaps less interested in actual dollar cost savings from running an EV vs. gasoline-powered vehicle. Second, if fuel efficiency was the only objective, we argue Tesla would not have achieved even a modicum of the success it has since the Model S launch in 2012; we would point to struggling EV/hybrid-EV competitors across price points as a reference. TSLA has come to market with a brand focused on disrupting the automotive eco-system, from manufacturing to distribution to infrastructure charging stations. We believe consumers continue to queue up for the Model S and upcoming Model X crossover utility because these vehicles remain unique, fun to drive, increasingly practical from a range perspective, and given remote update capabilities, carry some protection against obsolescence risk. Safety and lower operating/maintenance/projected service costs are benefits as well, which taken together paint a complete picture of TSLA's disruptive strategy. We believe while some OEM peers may have elements of TSLA's strategy, none to date have combined those elements as successfully as TSLA, and will therefore have difficulty closing the competitive gap in the future.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Tesla Motors closed at $222.26 yesterday.

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