How The New Model S Will Impact Tesla's Sales And Stock

Tesla Motors Inc (NASDAQ: TSLA) announced a newer version of its Model S on Wednesday called "Tesla Model S 70D," where the "D" signifies its dual motor. The newer version will be more expensive than the older version of the Model S, holding a starting price of $75,000.

Andrew Fung, CLSA Americas Research analyst, was on CNBC recently to discuss how the newer model will impact the sales and stock price of the company.

Good For Long-Term

"The Tesla D is certainly a nice upgrade and more compelling product than the prior 60 kilowatt version of the Model S," Fung said. "You do get a better range, and then some of the features are now standard, which make the comparably-equipped 60 [kWh version] more expensive than the new model.

"This, in our view, is going to be good for the long-term volume."

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Pressure On Stock To Remain

He continued, "That being said and consistent with our recent downgrade, the new 70D makes the upgrade to the 85D less compelling now and could cannibalize sales of the more expensive model in our view. This will obviously weaken the mix this year, which hits at our concerns on the margin pressure and downward earnings revisions that could happen in the second half of 2015.

"Even just the investor debate around the ability to grow profitably and potential for another capital raise, we believe that these concerns will continue to pressure the stock this year."

Less Chances Of Earnings Miss

According to Fung, after Tesla released the better-than-expected sales number of Model S recently, the probability of the company missing on its next quarter earnings "has dwindled somewhat," but he believes that in the upcoming quarters the earnings will decline sequentially.