Tesla Motors Inc (TSLA), Apple Inc. (AAPL): Has Elon Musk Finally Gone Too Far?

In any event, Tesla’s cool now at $70,000 per car, but it could become ubiquitous come 2016 at $35,000.

However, Tesla has a bigger challenge here than Apple Inc. (NASDAQ:AAPL). There are two big questions it will have to tackle on the road to rolling out a half-priced car:

• Will Tesla’s prestige diminish with mainstream-priced cars on the market?
• Will potential Model S buyers now hold off on new purchases until they see the new car?

The prestige issue may not seem like such a big deal. Most luxury-auto makers have entry-level lines these days. They have clearly faced Tesla’s decision to go for a larger target audience, and it’s one that can ultimately result in hundreds of thousands of cars sold, a year as opposed to tens of thousands of cars sold annually now. The trade-off is worth it.

The bigger concern may be that folks hold back. Apple Inc. (NASDAQ:AAPL) deliberately didn’t telegraph its price cuts ahead of time. Even rolling out new products at the same price points can dry up demand for the current model. The problem is also magnified when you go from hundreds of dollars saved by waiting on Apple Inc. (NASDAQ:AAPL) to tens of thousands of dollars that may be saved by waiting on Tesla.

Thankfully, this isn’t much of a problem at Tesla these days. It’s coming off a blowout quarter in which it stunned investors with a profitable showing. Orders are coming in faster than Tesla can produce the cars.

This is still a brazen strategy, but it’s hard to question Musk these days, when Tesla shares are making “hyperloop” gains.

The article Has Elon Musk Finally Gone Too Far? originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Tesla Motors.

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