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Tesla Inc (TSLA) Stock Is Priced for Perfection … For the Year 2022

Even small hurdles show the glaring problems with how TSLA stock is valued

Tesla, Inc. (TSLA)

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Tesla Inc (NASDAQ:TSLA) articles typically generate hate mail. I don’t expect this one to be any different.

The bullish argument about TSLA stock is that one day, really, Tesla will mass produce cars in a price range that millions of people can afford.

Those cars will have battery life that equals or exceeds the distance it is possible to drive on one tank of gas. Those cars will have plenty of places they can be recharged. The cost of producing the cars will be much lower, so Tesla can produce cars and sell them at a price point that justifies the company’s $60 billion valuation.

The way I see it, this will happen about the time the U.S.S. Enterprise launches.

Don’t Shrug Off the AAA

Setting aside all of the above, anything that makes it more challenging for people to purchase or maintain a Tesla vehicle is a bad thing for the company and TSLA stock. To that end, I think this month’s revelation that the Automobile Association of America, one of the country’s largest insurers, has boosted rates on Tesla vehicles hasn’t gotten nearly enough coverage, and should not be downplayed.

AAA looked at the Highway Loss Data Institute for its actuarial data. According to the above-linked article, “Teslas get into a lot of crashes and are costly to repair afterward,” said Russ Rader, spokesman for the Insurance Institute for Highway Safety, which is the Highway Loss Data Institute’s parent organization. “Consumers will pay for that when they go to insure one.”

According to the HLDI, the Model X had 41% more claims and cost 89% more to repair than the average car in its class. The Model S had 46% more claims and repairs cost twice as much.

With that in mind, let’s go back to the idea of pricing.

The bulls say the Tesla 3 will be so wonderful because it will be affordable, starting at $35,000, and even CEO Elon Musk is looking for something more like $42,000. However, the actual average sale price appears to be closer to $50,000. That is not affordable for the average American. That is a luxury vehicle price. My BMW 328i cost less.

And what does one get with this wonderful price? A 215-mile range (upgradable to up to 300 miles) vs my BMW, which gets 310 miles to a tank of gas. If you want to “Supercharge” your Model 3, good luck finding one. I live in metro Los Angeles, and the nearest station is several miles away — and it’s the only one within a half-hour drive.

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