The problem is, Musk conflates desire with demand. Prices can always prevent desire from equaling demand. Tesla has long promised to sell a Model 3 for $35,000, which would be in the ballpark of the average new car price in the U.S. Instead, it has relied on a $7,500 tax credit to get the cheapest Model 3 to $44,000. However, after selling 200,000 vehicles in the U.S., that tax credit starts to phase out. From January 1 of this year, Tesla buyers only get $3,750. In July the credit falls to $1,875, before disappearing in 2020. This creates a tough road ahead for a company that has struggled with profitability. Meanwhile, the competition is heating up. All major auto manufacturers either have EV models available, or soon will. Some of these cars are more affordable than the Model 3, but Tata Motors' (NYSE: TTM) Jaguar, Daimler's (OTC: DDAIF) Mercedes, and Volkswagen (OTC: VLKAF) are all debuting luxury model EVs to directly compete with the Model 3. During the call, Tesla lowered capex guidance for 2019 to $2.5 billion, raising questions about whether it can hit ambitious production goals. Near the end of the earnings call, Musk announced that CFO Deepak Ahuja is retiring. Ahuja had been in his position less than two years following the abrupt departure of the previous CFO. There's no doubt that Tesla's sales will continue to grow impressively this year, but it will be challenging to maintain the momentum. And with mounting competition and evaporating tax credits, the company will find it ever harder to turn a profit. Are you finding it ever harder to turn a profit? One person who can help is my colleague Jim Fink. Jim just uncovered a handful of stocks that could each turn $10,000 into $110,000. That's right. The investing legend who has spent the past three years quietly plundering the options market, scoring 269 winners for 12,116% in total profits, is now lifting the curtain on stock picks that are on the verge of crushing the broader market. Each of these tiny, under-the-radar companies is poised to soar up to 1,000%. Want to get the details, before it's too late? Click here for a free presentation. |
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