The Rich Like Other Luxury Brands Over Tesla (TSLA), UBS Survey Shows
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UBS analyst Colin Langan weighed on Tesla Motors (NASDAQ: TSLA) after results of their survey which showed high income households choose other premium brands over Tesla.
The firm's UBS Evidence Lab Electric Vehicle Survey of 9,400 individuals across 6 countries shows that coming BEV models mostly meet consumer expectations and that BEV penetration is likely to take off in premium first. Within the results we see that highincome households ($100k+) strongly prefer other luxury and quasi-luxury brands over Tesla.
When polling all individuals on whether they prefer buying an all-electric car from incumbent brands vs. TSLA, only 13-31% of respondents said they are likely to choose an incumbent brand compared to 20-44% who would choose Tesla. However, when looking at only $100k+ income households, 41-52% would choose an incumbent brand compared to only 20-29% who would choose Tesla.
"Given that we believe high-income households are more likely to purchase a Tesla, these results suggest that Tesla will face stiff competition as other premium OEMs begin to launch their own EV models in 2018," .Langan said. "We remain cautious on Model S demand as a result."
Further, the survey showed 43% consider 200 miles an acceptable minimum range for a single charge (Model 3 is expected to be ~200 miles). This percentage increases to 69% for 300 miles (expected range of upcoming German premium brands).
In addition, with all else being equal, 54% of respondents would expect an EV to be cheaper or the same cost as the equivalent ICE vehicle. However, based on calls with EV experts, they expect EVs to cost 11-20% more. Consumers also underestimate the cost of the battery pack. The median US consumer expects a replacement EV battery to cost $2,001-5,000 (weighted average of $4,200). They estimate that with repair cost, the battery replacement will cost ~$7,000 by 2025.
The firm maintained a Sell rating and price target of $160 on TSLA.
Shares of Tesla Motors closed at $206.43 yesterday.
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