Like most American males, I love cars. I may not know much about them, but I love driving fast (in accordance with local and state laws, of course). And Tesla (NASDAQ:TSLA) is one of those rare companies that has combined multiple technologies into one cohesive whole. In the past, this has supported a wild upswing in TSLA stock.
Better yet for car enthusiasts, Tesla has never stopped innovating. Recently, the iconic sports-car manufacturer Porsche (OTCMKTS:POAHY) made waves with its Taycan electric vehicle. Recently, a Porsche Taycan Turbo lapped Germany’s famous Nürburgring track with a time of 7:42. In doing so, the automaker set a lap record for a production electric vehicle.
If you’ve seen the undulating curves and corners of the Nürburgring, you know that anything under an eight-minute lap time is wicked fast. Not to be outdone, Tesla ran its latest Model S around the same track. Unofficially, the S completed a full cycle 20 seconds faster than the Taycan. And if that’s a truly legitimate time, Tesla stock deserves an upgrade just on the improved performance alone.
In the world of auto racing, a hundredth of a second may represent the difference between victory and defeat. When you’re talking about 20 seconds in this context, it’s a different dimension. Again, in theory, this should lift the TSLA stock convincingly.
After all, look at Ferrari (NYSE:RACE). Its business is entirely based on performance and sex appeal.
But Tesla is no Ferrari. Clearly, it’s best suited for being an EV supercar manufacturer, yet it insists on being a “regular” automaker. Unfortunately, this confusing message hurts Tesla stock in the long run.
TSLA Has Ferrari-esque Running Costs
Although not apparently a priority, Tesla is nevertheless working hard on its uber-cool Roadster. A true supercar, the company claims it will hit 60 miles per hour from a standstill in 1.9 seconds.
That’s the kind of outrageous statistic that gets people excited about Tesla, and perhaps TSLA stock. For context, Ferrari’s 812 Superfast — that is unfortunately its real name — hits 60 one second slower. As I mentioned up top, one second is an eternity.
Thus, with the EV platform, Tesla has not only matched the competition in terms of streetlight-to-acceleration, it has utterly dominated its fossil-fueled exotic peers. However, it’s proven performance won’t do much for Tesla stock. That’s because TSLA insists on providing a comprehensive product portfolio.
On the surface, I’m okay with that. For instance, Toyota (NYSE:TM) has found great success building reliable every-man cars. At the same time, it has ventured into the luxury and performance categories with its Lexus brand.
But the difference here is that Toyota — aside from the larger scale — has a cohesive strategy. In other words, it’s not like Tesla, trying to peddle deceptively expensive cars to middle-class drivers. The hidden expenses of owning even the “entry level” Model 3 represents a longer-term risk for TSLA stock.
While EVs undeniably appeal to the techie crowd, they also have multiple liabilities. Specific to Tesla, its EVs are expensive to insure: Essentially, it’s on par with insuring a Porsche 911.
And why is protecting your Tesla so onerous? To put it simply, Teslas basically are the Ferraris of EVs, but it doesn’t want to admit that. Because of their exotic technology and parts, they’re very expensive to repair.
As such, they should only be marketed to the affluent. Anyone who blinks at $10,000 or higher repair bills shouldn’t drive these things.
TSLA Stock Faces Risks from Eroding Consumer Base
I wasn’t kidding about the $10,000, either. One unfortunate Tesla driver documented his nightmare story of a fairly typical fender-bender accident. After being rear-ended by an SUV, he received a final bill for the damage totaling nearly $36,000.
From the pictures the driver shared, I think we can all agree that the damage is not worth the cost of an entry level Mercedes Benz model. And from what other Tesla drivers shared, these are not necessarily atypical expenses.
Again, this is because Teslas are exotic cars masquerading as normal ones. While the average consumer is initially wowed, more people eventually will catch on. When they do, they probably won’t want to deal with EVs and their (expensive) quirks.
Instead, they’ll go back to the trusty internal combustion engine. Yeah, it’s loud and environmentally unfriendly. But when you’re facing a $36,000 repair bill, any alternative is a better alternative. And that really doesn’t bode well for Tesla stock.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.