Car companies are known to use a single platform to produce several different vehicles in one production facility. Tesla is said to be introducing its Model Y crossover SUV sometime in 2018; it’s a vehicle that could be built on the same platform as the Model 3. If so, the cost of producing the Model Y would drop significantly helping to point its way toward GAAP profitability and automotive mass production.
We don’t even know if the Model 3 is going to be a hit, but a smooth rollout later in 2017 should pave the way for strong demand of the Model Y.
Bottom Line on Tesla Stock
In December, I suggested Tesla stock belonged in one’s IRA, albeit that it shouldn’t represent more than 5% of your plan. The reason: TSLA stock is still a risk despite all the good things happening at the company.
Frankly, I think Tesla stock gets to $500 by this time next year, because by then we’ll know if the Model 3 is a success or failure. When it starts making money, and that’s a big if, $1,000 will look like chump change in the scheme of things.
Unfortunately, there’s a lot of water to go under the bridge yet. If you’re long, I’d stay long. If you’re short, good luck to you, and if you don’t own TSLA stock, I wouldn’t get overly aggressive in your purchases until its future is a little more clear.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.