Tesla Model S Plaid is an 'impressive feat:' Oppenheimer analyst

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Tesla’s (TSLA) new 2021 Model S Plaid is an “impressive feat” in terms of performance and technology, and makes a strong addition to the car manufacturer’s product portfolio, Colin Rusch, senior research analyst at Oppenheimer Holdings (OPY), told Yahoo Finance Live.

June 10’s “delivery event” for the Model S Plaid showcased the raw capabilities of the newest member of Tesla’s lineup. With deliveries kicking off last Thursday, customers are now able to take ownership of an EV that Tesla claims can do 0 to 60 in under 2 seconds and can hit a top speed of 200 mph for $130,000. Powered by 3 motors, the Plaid packs 1,020 horsepower under the hood and has an estimated range of 390 miles.

While the base spec Model S was no slouch, Rusch said Tesla brings to the table several key innovations and significant improvements to performance with the Plaid.

“They're trying to do a couple of things with this,” Rusch said. “One, update the Model S, but also really innovate on the technology side. We saw a couple of things with the RPMs on the motor running at blazing speed, and in the light weight.”

The car “more than meets the needs of the company in terms of [Tesla’s] product portfolio,” he added.

Rusch cited improved comfort elements as well as incremental steps towards making a fully autonomous vehicle in software and other technology as being Tesla’s main successes with the Plaid. It is to be expected that Tesla would incorporate these new design elements into their high-performance models first before seeing these same features trickle down to other cars in their lineup like the Model 3, Rusch said.

The release of the Model S Plaid comes hot on the heels of the announcement that Tesla would be cancelling plans for a Model S Plaid Plus. As for whether this cancellation raises any concerns with the company, Rusch believes that the Plaid is impressive enough.

“I mean, honestly, I don't know why we need to go faster than 0 to 60 in two seconds or go 200 miles an hour,” Rusch said. “It seems like an unnecessary element that they didn't need and so they took it out. And so for us, it's really not a concern at all.”

Following conflicting sales reports, particularly in regards to sales performance in China, Tesla’s stock value dipped in light of concerns that the company had lost market share there. However, as the third-largest EV manufacturer in China, Rusch does not see this significantly impacting Tesla’s valuation model because of its objective in the short term to meet demand that is well in excess of supply. This, in combination with its sporadic month-to-month shipments to markets in different areas of the world, is what is causing Tesla to ship a number of vehicles produced in China out of the country, Rusch said.

“Historically, we've seen the company deliver almost half of its vehicles in the last month of the quarter,” Rusch said. “And so we're really watching what the June numbers will ultimately be, and we'll see where those shake out here in a few weeks, just after the 1st of July with the delivery report.”

In this Sunday, May 9, 2021, photograph, a long row of unsold sedans and sports-utility vehicles sits at a Tesla dealership in Littleton, Colo. (AP Photo/David Zalubowski)
In this Sunday, May 9, 2021, photograph, a long row of unsold sedans and sports-utility vehicles sits at a Tesla dealership in Littleton, Colo. (AP Photo/David Zalubowski)

With Tesla currently trading around $600 as of June 14, it is still far away from Rusch’s price target of just over $1,000. As for what will get Tesla there, Rusch pointed to increased autonomous driving functionality surrounding urban driving and intersections in a wider array of geographic environments. According to Rusch, Tesla has a clear advantage over its competitors due to its ability to leverage its faster AI learning cycles.

“Our thesis from here is really about Tesla delivering on the autonomous opportunity,” Rusch said. “By the end of the quarter, they'll have nearly a million and a half vehicles on the road collecting data and forming their AI and improving the system.”

Legacy automakers such as GM (GM), Ford (F), and Volkswagen (VWAGY) have all seen recent initiatives to add EV offerings to their product lineups, and these manufacturers’ stocks have all outperformed Tesla’s in the past 6 months. However, Rusch does not view the competition as a major threat for Tesla, citing a healthy capitalization model as well as the difficulty of entry into the EV market.

“[Other established OEMs are] still, I think, are disadvantaged from a performance perspective versus Tesla, as well as from a brand perspective, given the evolution of the technology,” Rusch said. “And again, that's why we think this Plaid was important for us to get out into the public realm, because they are demonstrating a clear technology lead versus their peers, whether it's the established OEMs or some of the startups.”

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Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV

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