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Is Tesla Inc (TSLA) Losing To General Motors Company’s (GM) Chevy Bolt?

The market for electric vehicles continue to grow as evidenced by the rise in unit sales for the month of August.

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In other words, there’s an appetite for electric vehicles. And despite Tesla’s premium price tag and luxury status, both sales trends and vehicle specifications/features suggests that customers who are looking for an all-electric vehicle will automatically default to Tesla, especially since the Model 3 will be priced comparatively with the Chevy Bolt.

And what should TSLA stock investors make of this? That’s where faith placed in Tesla CEO Elon Musk and his ability to execute on the company’s production promises becomes even more important.

How TSLA Can Distance Itself

More than half a million customers have already pre-ordered the Model 3, ponying up $1,000 cash just to hold their place in line. The Model 3 will costs $35,000 for the basic model, but could also come as cheap as $27,500 when factoring the $7,500 federal electric car tax credit each customer could receive. And this tax credit can potentially drive even higher sales for Tesla, which plans to produce 5,000 vehicles per week at some point in 2017. And the company insisted it could double that rate in 2018.

What’s more, Musk sees Tesla’s production levels hitting 500,000 cars per year in the next two years. In other words, it’s not yet time to waive the checkered flag to the Chevy Bolt. And here’s the thing: Even as the Chevy Bolt — once available in just 20 of the nations’s largest states — became available nationwide, sales growth has stalled, and slipped into reverse, falling from 20% in July to 7% in August. This suggests that it’s possible consumers who are in the market for an electric vehicle are waiting on a Model 3.

Bottom Line for TSLA Stock

The first half of the year was good for TSLA stock, which soared almost 70%, crushing the single-digit rise in the S&P 500 Index. Assuming Tesla, which continues to draw criticism for its high cash burn, can produce the vehicles at or below budget, TSLA stock can reach $400 — 10%-plus upside — by the end of the year.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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