Tesla X to devour premium SUV market: Morgan Stanley report

Tesla's highly anticipated Model X crossover vehicle will feature dramatic "falcon" doors, seen here in concept art for the SUV, expected next year.
(Tesla Motors)

Tesla’s Model X crossover electric car is going to outsell the company’s Model S sedan, and is “ready to feast” upon an unsuspecting premium SUV marketplace, says the financial firm Morgan Stanley.

A report this week stated that the much-anticipated, much-delayed X -- not due to be in Tesla stores until the middle of next year -- will be a better car and will deliver better sales to the Palo Alto-based automaker.

The value of Tesla stock, thus, should be about $320, well above its current $250, making Tesla “our top pick in US autos.”

It will also “sweep every Car of the Year award on offer by the automotive media,” the report said.


Morgan Stanley hasn’t seen or driven the X -- no one outside of Tesla has. But the firm is basing its predictions on tangible facts. Tesla has more money and technical resources on hand to support the X than it did the S, the company observes. It is also investing more time and money into the X launch, and will likely put a car on the road that has fewer bugs to correct than the S did.

Morgan Stanley also expects the still un-priced X to have an MSRP of 5-10% higher than the S, which starts at $71,000, but will be more successful and provide better value, based on its assumptions that the car will have more standard features. (The company also loves the “falcon doors” on the X.)

The X could outsell the S by the end of 2016, the firm said.

Throwing a grain of salt into its report, Morgan Stanley said, “It is worth noting that the commercial launch had been delayed by 6-9 months,” and added, “We are also surprised that Alpha and Beta prototypes have yet to be tested for what is a significantly new product.” The report said it expected Tesla would begin testing “in a matter of days.”


Tesla founder Elon Musk himself had a little fun over the impending arrival of the X at his shareholders’ meeting last week.

“There are no cars available for a test drive,” he told analysts during a conference call. “There is no information about the cars in our stores. If someone comes in to buy the X, we try to sell them the S. We anti-sell them!”

Despite that, Musk said, the appetite is huge, for a car that people have no reason to want.

“I think people are right -- even though they don’t have the information to know they’re right,” Musk said. “We will not have a demand issue.”


Morgan Stanley added its own disclaimers. As a Wall Street investment firm, the company has a financial interest in Tesla, owns some stock in Tesla, has received payment for investment banking services from Tesla, and has received compensation for non-investment services from Tesla -- as it has in most other auto companies.

Twitter: @misterfleming