Tesla Motors Inc (TSLA) Model S U.K. Price Well Below Expectations


Tesla Motors Inc (NASDAQ:TSLA) has announced that the Model S will cost £49,900 after a government grant is taken into account, making it less expensive to buy in the U.K. than in the rest of Europe and much less expensive than analysts had expected, reports Faye Sunderland for TheGreenCar.

Tesla Model S costs

The Tesla Model S costs €72,600, roughly £59,000, in continental Europe and analysts had expected the additional costs necessary to convert the Model S for driving in the left lane could push the price as high as £80,000, putting it well out of reach of most consumers. When the savings on gas are taken into account the effective cost becomes pretty reasonable, and financing will be available at around £800 per month.

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Tesla Motors Inc (NASDAQ:TSLA) owners will also be able to use the company’s charging stations for free, but they haven’t actually been built yet. Tesla said that 90% of Brits will have a recharging station within 200 miles by the end of next year, but of course even thirty or forty miles is too far for regular use. Realistically, Tesla Motors Inc (NASDAQ:TSLA) owners in major urban areas can expect convenient access to a recharge station in 2014, but everyone else will have to recharge at home for the time being.

Tesla Motors’s goal

Tesla Motors Inc (NASDAQ:TSLA)’s goal all along has been to make electric cars available at competitive prices, and the company appears to be succeeding. Its current valuation predicts explosive growth, and this is the kind of decision that Tesla Motors Inc (NASDAQ:TSLA) bulls must be happy to see. Even if setting the price well below expectations means reducing margins in the short term, it’s hard to imagine someone spending five years in an electric car and then deciding to start paying for gas again unless they have a truly bad experience. Getting people to switch will create lots of long term customers.

The next step for Tesla Motors Inc (NASDAQ:TSLA) is to come out with an introductory model that the middle class can afford. We know that the next Roadster won’t be released until the Model S has been on the market for a year or two, and while that won’t be a budget model a significant price reduction could open up huge segments of the market.