Will Tesla's Model 3 Cannibalize Demand For Model S And Model X?

Tesla Motors Inc (NASDAQ: TSLA) unveiled the Model 3 on March 31, at the largely anticipated base price of $35,000.

Oppenheimer’s Colin Rusch maintained an Outperform rating on the company, with a price target of $340, stating that Model 3 could prove “crucial to the long-term growth story of the company.”

Model 3 Unveiled

Mentioning that the car was “extremely attractive,” Rusch said that the add-ons were likely to bring the price up to as much as $50,000–$60,000.

Tesla Motors revealed prototypes of Model 3 in three colors and indicated that shipments would start by the end of 2017, in-line with the company’s previous commentary.

Related Link: Tesla Model 3 Has Already Created $4.5 Billion In Potential Revenue

Rusch believes that “the car's base features and design should be compelling enough to drive strong demand.”

Features

Tesla Motors mentioned that the car would be five-star rated in every category; the base model would be able to go from zero to 60 mph in less than six seconds, with faster acceleration available with upgrades. The base range would be 215 miles and the vehicle could seat five adults comfortably.

Customers could also choose from rear and all-wheel drive, while the vehicle would come with standard autopilot hardware.

“We believe the biggest concern with the Model 3 launch is cannibalization of demand for the Model S and the Model X. As we expected, little was revealed about upgrades to Models S and X, to insulate those products,” Rusch added.

Tesla unveiled its #Model3 last night. It's stock is up 7% this morning. Which would you rather own? $TSLA

— Benzinga.com (@Benzinga) April 1, 2016

Image Credit: By Jeff Cooper (jecoopr) [CC BY 2.0], via Wikimedia Commons