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Tesla Motors' Bump in the Road Should Come as No Surprise


The Model S may have stolen the spotlight by standing out, but Goldman Sachs is shooting straight.

Earlier this spring, Elon Musk and Tesla (NASDAQ:TSLA) were basking in the limelight as investor optimism drove shares of the stock from less than $40 in March to a high of $129.90 on July 12. With a July 16 downgrade from Goldman Sachs calling for a best case valuation for Tesla of $113 per share and a worst case of $58, it's time for Tesla to reassess its priorities in its ongoing effort to revolutionize the car industry.

The goal at Tesla is to make a stylish, affordable, all-electric vehicle, but as of now, it has only accomplished two of those three objectives.

The Model S is an outwardly pretty car. Its smooth and sporty lines provide a welcome alternative to its less attractive fellow electric cars like the Nissan Leaf (OTCMKTS:NSANY) and the 2012 Mitsubishi i-MiEV (TYO:7211).

Right now, however, a base price of $62,400 is anything but affordable. An Audi A6 (ETR:NSU), Mercedes E-class (OTCMKTS:DDAIF), and BMW M3 (ETR:BMW) would put a similar or smaller dent in consumers' wallets compared to the Model S.

Back in May, Musk discussed plans for a smaller Tesla, priced at approximately $30,000, to be released in the next three to five years. This would lock down affordability, but anyone looking for a reasonably priced electric car can already find one in the Leaf and i-MiEV.

Additionally, the drastic differences between the Chevy Volt's (NYSE:GM) sleek concept model and its mediocre production vehicle show that cutting a car's price tag in half could call for some sacrifices in the looks department.

Tesla's vehicles are meant to stand out in a crowd. By doing this, however, the brand has established an electric-luxury category in the already niche electric car market.

Hondas (NYSE:HMC) and Toyotas (NYSE:TM) are far easier to come by during a typical commute than luxury vehicles. They may lack sex appeal and high-powered engines, but they get people from place to place, sans lofty price tags.

Comparing some simple statistics of the Leaf, Model S, and i-MiEV makes it clear that priorities for Tesla's vehicle just aren't the same as its competitors priorities.

From a consumer's perspective, the choice comes down to practicality versus performance -- and right now, despite a limited top speed, its impressive acceleration and motor power make it clear that Tesla is putting most of its eggs in a sporty basket.

The upgrades to the base models are also telling. The move from the Nissan Leaf S model to its next tier model, the SV, will provide "luxuries" like a navigation system, aluminum-alloy wheels, and an on-board charger. A move to a Mitsubishi i-MiEV SE offers similar benefits, while upgrading your Tesla primarily offers gains in power, speed, and acceleration.

The Leaf and i-MiEV have far from spectacular specs, but what they do offer is a bare-bones and efficient driving experience.

They can achieve acceptable speeds and they can accommodate the average commuter. They are clearly crafted with the intention of eliminating the usage of fossil fuels. The Model S, meanwhile, is designed more for Sunday drives than office carpools, but it happens to be environmentally friendly.

As of now, there are plenty of reasons to love the Model S, but apparently it's hard for analysts to say the same for Tesla stock.

See also:

Tesla Motors Inc's Elon Musk Has a Wild New Idea: The 'Hyperloop'

Hyperloop: Since We Don't Have Flying Cars or Hoverboards, Elon Musk's Latest Brainstorm Will Have to Do
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