Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

http://www.businessweek.com/ap/2013-04-03/disappointed-investors-sell-off-tesla-shares

AP News

Disappointed investors sell off Tesla shares


NEW YORK (AP) — Shares of Tesla Motors Inc. fell Wednesday after the electric car maker's announcement of a new financing option similar to a vehicle lease failed to impress investors.

THE SPARK: Tesla said that under the new program, US Bank and Wells Fargo will make loans for the 10 percent down payment required for its Model S sedan, which eventually would be covered by a $7,500 federal tax credit for electric car buyers.

In addition Tesla said it will give buyers the option to sell the car back to the company after three years at a guaranteed value.

THE BIG PICTURE: The news came after about a week of buildup that began with a tweet from Tesla co-founder and CEO Elon Musk that set off speculation in the press and online.

Musk said the financing program will expand the market for the Model S to people who don't want to make a big down payment, and it frees people from worrying about whether their electric car will depreciate as the batteries get older, he said.

Under the program, buyers would sign up for a 66-month, 2.95 percent loan. Musk added that he personally will guarantee the car's trade-in value in addition to the company program.

The Model S, which has a range of about 265 miles per charge, has a starting price of $69,900. Tesla will guarantee that the car's value won't drop at a larger percentage rate than the Mercedes S Class. If the Model S values are higher than the Mercedes, Tesla will pay the market rate.

THE ANALYSIS: Jefferies analyst Elaine Kwei backed her "Buy" rating and $45 price target for Tesla stock, saying that the new financing option will significantly widen Tesla's pool of buyers. But she said that while the move is a big step for the company, it might not be the game-changer that some investors may have hoped for after a week of hype.

Kwei said that while Tesla characterized the financing program as "revolutionary," it's very similar to a traditional car loan with a buyback option. She said the most notable aspect of the announcement was Musk's personal guarantee of the trade-in value and benchmarking against the Mercedes S Class.

THE SHARES: Down $3.06, or 6.9 percent, to $41.28 in morning trading, after falling as low as $40.64 earlier in the session. Over the past 52 weeks, the stock has traded between $25.52 and $46.68. The shares are up about 20 percent so far this year.


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus