Tesla Motors Inc. (NASDAQ:TSLA) is back to familiar territories above the $200 trading mark after plummeting earlier in the week with UBS director and auto analyst, Colin Langan, reiterating the stock remains volatile. During an interview on CNBC, Langan, painted more doubt on the giant electric company ability to attain impressive sales in the coming years based on the fact that its cars still remain expensive for mass markets.
Tesla Motors Inc. (NASDAQ:TSLA) cars remain expensive compared to normal cars attributed to the fact that battery costs are still high as the company prepares to start manufacturing its own from a plant in Nevada. The economics of the battery factory according to the analyst may still affect Tesla’s ability to reduce the prices of its cars as early as 2025.
“Comparing it to a gas vehicle by 2020 with the scale benefit of the Gigafactory, you are getting it to be $7,000-10,000 more than a mass market vehicle on the gas side. […] If you assume you can double the density of a battery and you look at 2025 you still $3,000 to $6,000 more expensive,” said Mr. Langan
The battery factory was expected to accord Tesla Motors Inc. (NASDAQ:TSLA) a breakthrough in developing highly affordable cars something that the analyst remains skeptical on. The ongoing uncertainty over oil prices also paints further doubt on whether consumers will opt to buy electric cars that are relatively expensive or opt for fuel-efficient and affordable cars.
Tesla Motors Inc. (NASDAQ:TSLA) could enjoy an upside with the Gigafactory that will not only be used to produce batteries for electric cars but may also find use on solar power applications. Steve Grasso believes Tesla could get an uplift in the market should it resort to manufacturing batteries for the national grid something that the analyst remains skeptical on.
“It is questionable can the economics really work and is Lithium the same solution that we should be using for stationary storage. There might be heavier applications that might work better in stationary storage,” said Mr. Langan.
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