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Tesla’s new sedan will make or break the company
The company’s retail strategy is also untested. Its 14 U.S. stores have a tiny presence compared with Lexus’ 230. When Roadsters need repairs, Tesla deploys technicians to the owners’ house. It will be far more expensive to do that if Tesla sells as many Model S sedans as it hopes. The company’s plans for servicing the cars are hazy. Musk said recently that Tesla simply wants to make cars that don’t need servicing.
“We want every aspect of that car to be as perfect as possible,” he said.
For investors, the Model S will test whether the company is built for endurance or a quick test drive. So far, the company’s glamorous founder and its sculpture-like cars have generated enough buzz to keep the stock hot. Its price has nearly doubled from its initial public offering level of $17 a share two years ago.
Tesla’s current stock price of $32 assumes achievements the company has yet to accomplish, says Carter Driscoll, who researches clean energy companies for Capstone Investments. The company has lost $759 million since it was founded in 2003 and has never made a profit. It survives, in part, on its loan from the U.S. Department of Energy. It also sells electric drive systems to Toyota and Daimler AG.
“It’s sexy,” says Driscoll. “People want to believe in it. But there are so many what ifs, ands or buts.”
But if you’re a believer, all you have to do is point out Musk’s latest accomplishment: Last month, his SpaceX venture became the first private company to send a cargo rocket to the International Space station.
Moon shots can work.
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