Home Technology Tesla Motors Inc Customers Don’t Care Much About Oil Prices

Tesla Motors Inc Customers Don’t Care Much About Oil Prices

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Tesla Motors Inc (NASDAQ:TSLA) shares have continued to rise, highlighting the premium segment the EV manufacturer caters to. The automaker’s customers are rich enough to shell out money for new models, and they’re apparently willing to do so even when gasoline prices are tanking. Therefore, Tesla sales may not be affected by the collapse in oil prices.

Pump price not an issue for wealthy customers

Shares of the Palo Alto-based company have taken a dip by almost 13% since the Thanksgiving holiday on concerns that depleting oil prices would cut down on demand for the company’s vehicles, according to analysts.

However, David Whiston, an auto analyst with Morningstar, believes speculations surrounding oil pieces and demand for Tesla’s vehicles are overblown. Whiston feels that to the affluent class who is ready to buy Tesla cars for as much as $100,000, the price at the pump is not a prime motivator. The analyst said, “A lot of investors think cheap oil is bad news for Tesla, but it’s not that simple.”

During a telephone interview with Bloomberg, Whiston said those customers who are going for Tesla are least concerned if gas is cheap or expensive. The prime driver behind their decision is a status symbol, performance, or environmental concerns, which is the real reason they avoid fossil fuels.

Tesla faces competitive headwinds

Robert W. Baird & Co analyst Ben Kallo said the correction in the stock that lasted for seven days was a good opportunity for investors. Shares surged yesterday after low expectations for Tesla’s November U.S. sales as presented on industry website InsideEVs.com. As per the estimates from InsideEVs.com, Tesla’s U.S. sales for November are at 1,200, which is the lowest in the three months and is same as last year.

Apart from depleting oil prices, Tesla is seeing competitive headwinds from some of the biggest names in the automobile sector such as BMW and Audi. Recently Audi AG stated that it will launch an electric-powered crossover in 2017.

Until Monday, in the United States, gasoline prices had dropped for 69 days to an average of $2.66 per gallon, according to motoring club AAA. On Tuesday, Tesla shares spiked 1.2% to close at $216.89 in New York after dipping as low as $204.27. In 2014 so far, shares are up 44%.

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Aman Jain
Personal Finance Writer

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