Analysts from Autotrader and Kelley Blue Book Comment on Tesla

Tesla is scheduled to release its Q4 and full-year financial results today. The popular “phone call with Elon” kicks off in a few hours and, if history is a guide, it will be light on details and heavy on speculation.

The analysts and experts from Cox Automotive have been looking carefully at the Tesla brand and offer the following commentary on the company. We also posted Kelley Blue Book Brand Watch data on Tesla in the new Cox Automotive Newsroom here, which showcased the continued strength of the brand. If you would like to speak to someone from our team, feel free to contact us.

Akshay Anand, Executive Analyst, Kelley Blue Book

Despite what some may say, I believe Tesla’s success largely hinges on the Model 3. Until now, the brand has been aspirational, defined mostly by the pricey Model S. That changed with the Model 3. It’s not a $35K car, but it is still most buyers’ first touch point with the brand, and these owners will likely have the Model 3 as a primary vehicle, not secondary or tertiary vehicle as is the case with more affluent buyers. Tesla has invested significant assets in the Model 3 from many standpoints – money, time, human energy, and more. Tesla simply cannot let the Model 3 fail. It’s the key to their future.

Michelle Krebs, Executive Analyst, Autotrader

Tesla’s fourth-quarter and full-year 2018 financial results illustrate the steep financial challenges the company faces. And also the conundrum that is the Tesla brand. According to data from Kelley Blue Book’s Brand Watch, a perception tracking study, the Tesla brand continues to be pure gold. Among its luxury competitors, Tesla ranks tops in consumer perception in eight of 12 key factors. In some cases, it ranks #1 by a wide margin, particularly in fuel efficiency as well as prestige, reputation and technology. In contrast to some of its luxury competitors, consumer perception of Tesla has improved in almost every category since 2015.  (Read more here.)

At the end of the day, it’s the two realities of Tesla that many analysts struggle with: A company that continues to be a darling among luxury shoppers and an absolute laggard in financial measure.

Karl Brauer, Executive Publisher, Autotrader and Kelley Blue Book

For most of Tesla’s history it prided itself on “breaking the rules” while avoiding traditional industry policies. That approach contributed to Tesla’s image as a disruptor, but over the past year we’ve seen the company take a far more conventional approach to vehicle production and pricing. On the production side, Tesla has laid off line workers even as it acknowledged robots can’t completely replace humans in vehicle assembly. The lay-offs represent Tesla’s need to balance labor with production to create a cost-effective assembly line. On the pricing side, Tesla has reduced its product line while cutting prices to juice sales. The automaker has also reduced color offerings and broken out pricey premium features, like Ludicrous Mode. All of these moves point to Tesla transitioning from a start-up tech company to a full-fledged, volume automaker desperately seeking sustainable sales and profitability.

Brian Moody, Executive Editor, Autotrader

Tesla essentially invented the luxury/performance EV, and for a while now, they’ve been the only game in town. That’s all changing now, with the Jaguar I-Pace, Audi e-tron, a new Porsche EV and others offering stiff competition. For Tesla, it won’t be easy to increase sales significantly, as the Model 3 has done in the past year. There’s no doubt: The Model 3 is a very good electric car. At the right price and with production issues ironed out, the car could continue to be a big seller. Right now, the only thing in the Tesla Model 3’s way is the Tesla business.