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Tesla Motors Inc (TSLA): In Search of a Comparison

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It seems like a crazy idea. Build an aesthetically appealing product, surround it with a cult of fans, charge a premium price for it, and sell it in its own sleek modern stores in shopping malls. Funny thing is I just described both Tesla Motors Inc (NASDAQ:TSLA) and Apple Inc. (NASDAQ:AAPL).

Now before the comments section blows up with people who are itching to point out how Tesla Motors Inc (NASDAQ:TSLA) and Apple are different, I want to make it clear that Apple is not a perfect comparison for Tesla. In fact, nothing is. Tesla Motors Inc (NASDAQ:TSLA) is an entirely new company trying to do what no other company has done: build a sexy and profitable all-electric car for the masses. As such, comparisons relevant to Tesla have both their similarities and their differences. Here we will take a look at a few of these comparisons.

Automotive comparisons

Tesla Motors Inc. (TSLA)

At its core, Tesla Motors Inc (NASDAQ:TSLA) is an automotive company. It designs, manufactures, and sells its own vehicles in a way similar to how major automakers do, just on a smaller scale. As of now, Tesla Motors Inc (NASDAQ:TSLA) is building the Model S, which starts at $52,400 but can rise to over $100,000 with additional packages and the larger battery pack options. With a goal to produce 20,000 Model S’s during 2013, Tesla is dramatically increasing its production rates from the 2,500 total Tesla Roadsters produced over the Roadster’s run.

But this figure is dwarfed by the production figures of the largest automakers. Right now, Tesla is more in line with a smaller (but growing) version of BMW Manufacturing Corporation or Porsche Cars North America, Inc. Both of these automakers are profitable, suggesting that if Tesla wanted to stay in the high end market, it could survive if it plays its cards right. But Tesla wants to be much more than another luxury manufacturer for the well-off segment of the population. It wants mass market sales.

What many people who consider Tesla Motors Inc (NASDAQ:TSLA) elitist fail to realize is that the automaker is building its capabilities to manufacture an affordable mass market car BY building the vehicles currently in development and production. Tesla CEO Elon Musk described The Secret Tesla Motors Master Plan to build expensive cars to generate publicity and funding for building less expensive Teslas all the way back in 2006.

Since investors must always be looking toward the future, it is worth bearing in mind what Tesla hopes to become. Tesla’s Gen III sedan is expected to be released somewhere between 2015 and 2017 and cost somewhere in the low $30,000 range after the federal tax rebate of $7,500. This price is comparable to that of a BMW 3 Series (the car Tesla hopes to defeat on a performance basis), as well as the Chevrolet Volt and Nissan Leaf.

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