A New Model Will Not Help Tesla

Elon Musk said in a series of tweets that Tesla Inc. (NASDAQ: TSLA) will launch a new, powerful and feature-packed version of its new Model 3. Among other things, it will have dual engines and is better than a BMW M3 ultra-fast sports car.

The announcement won’t cool down upset investors at all. As a matter of fact, it may enrage them. Investors want sales, and Tesla continues to disappoint.

Musk’s tweets:

There is no question about the car’s innovations. However, there will not be a large market for a $78,000 Model 3. The car has a base price of about $35,000. It is Tesla’s appeal to the masses, and the only way the company has to push sales into the hundreds of thousands of vehicles a year. That has been the financial promise of Tesla: it will become a mainstream car company that dominates the electric car sector.

A new car will not cloud the issues Tesla faces. Among these are slow production of the Model 3 and worry the company will need to raise large sums of money this year. Musk says Tesla will not have to raise any more money, which adds to concerns he does not have a realistic view of the future of his own company.

The new Tesla sounds like a great car that will sell very few units. The makes the announcement almost worthless.

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