Long-time Tesla Motors (NASDAQ:TSLA) bull Morgan Stanley sparked a tidy stock climb throughout the earlier part of this week with an ambitious note from August 7 that said that Tesla’s forthcoming Model X crossover SUV — which is slated to begin deliveries next year — will outsell the company’s Model S sedan. The firm said that Tesla is “ready to feast” upon an ‘unsuspecting’ premium SUV marketplace, the Los Angeles Times quoted.
Morgan Stanley is so convinced that the Model X will be a better car that will deliver better sales, that it says the production of the SUV could warrant a $320 stock price, about $140 more per share than where they sit now. No one outside of Tesla has actually driven the Model X yet, and the Times says that the firm’s argument is based mainly on “tangible facts.” Tesla has more money and technical resources on hand to support the X than it did the S, the Times quoted Morgan Stanley as describing, and is also investing more time and money into the X launch, and will likely put a car on the road that has fewer bugs to correct than the S did.
By the end of 2016, the Model X may outsell the Model S sedan. Unlike the Model S, the X will come standard with all-wheel drive, ‘falcon’ style doors for parking in close quarters, and similar battery setups to the existing options available for the sedan. It’s also expected to be priced around the same as the Model S, which would put it well at the top of the premium SUV food chain.
For example, the X will be aimed at luring buyers if the Mercedes ML400, which has 329 horsepower and costs about $63,000. Assuming a base price of around $70,000 for the Tesla, and taking into account the alternative fuel credits, that puts the two SUVs on a pretty even keel — and despite Tesla’s tremendous efforts, it’s hard to compete with the panache of Mercedes’ three-pointed star. With Benz, loyalty runs high.