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Tesla Shares Soar on the back of the Model 3's rise

By Patrick Higgins  |  03/08/2017 14:03

Elon Musk's outreach to average consumers with his new and relatively inexpensive, "Model 3," electric car has sent Tesla shares skyrocketing.
 
The Model 3 sedan, which was first seen last month at an unveiling ceremony at Tesla's primary factory in Fremont, California, is part of Musk's push to make Tesla vehicles more accessible to a wider market.  This effort to expand market clout has caused Tesla stocks to rise 6% in value today, as many investors continue to buy into the idea that Tesla's newest venture will drastically change the automobile industry.  Though Tesla stock prices suffered slightly on Monday after Musk warned of disarrays in manufacturing, shares have risen by 52% in total this year and today's 6% growth has added on about $3.2 billion in company value. 
 
In response to such rapid gains in value, many brokerage firms have raised their price targets for Tesla.  RBC Capital Markets, one of Royal Bank of Canada's subsidiaries, have raised their target by $31 to $345, ahead of the market median at $322.  Additionally, per a Tesla statement released yesterday, quarterly revenue streams have doubled since the unveiling of the Model 3, and that the company is receiving 1,800 Model 3 order reservations daily.  Previously, Tesla had produced luxury cars such as the Model S and the Roadster, which were out of reach to average consumers.  Critically, the Model 3 is part of Tesla's drive to produce an accessible, yet luxurious, all-electric challenger to rivals such as BMW's 3-series and Mercedes-Benz' C-class.  The car has a maximum speed of 130 mph, and 0-60 hovers at 5.6s.  Additionally, the car has a maximum range of 310 miles per charge, according to EPA estimates.  The sleek and class of the Model 3 is part of Tesla's plan to make electric cars desirable and utilisable.
 
However, Tesla, as a still relatively small-scale car making company, will need to continue to overcome obstacles if it seriously hopes to be a big-time car producer.  Some of the challenges facing Tesla include production capacity limits and continued investment complications.  Musk has said that the Spartan aspects of the Model 3 will simplify production, but not all are convinced.  Though Musk has sought to clarify the manufacturing issues, questions still arise over whether such a car is viable for Tesla, and whether the company can transform itself into a large-scale manufacturer.  It is still a relatively small-scale company, with just two major production facilities in the US.  Then there is the issue of mass cancellations of pre-orders in the past year, from 518,000 to 450,000.  The first Model 3's will be delivered to customers late this year, but most won't be ready until 2018.  Musk attributed these cancellations into customer impatience, but many wonder whether the Model 3 will be worth the wait in a fast-evolving business of electric car-making.
 
The Elysium-esque aim of Musk is not only to turn Tesla into a consistently profitable company and cement its place as a cornerstone of the automobile business, but also make clean electric cars affordable, desirable, and available to the general public; not only for Americans but for people worldwide.  Regardless of any foreseeable issues, Tesla and its leader are determined to alter the makeup of the automobile industry drastically, and we can expect more developments within Tesla's market expansion in the coming months.
 

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