[salimmadjd]

I think that's what Tesla is hoping for. However, I don't see it happening.

Tesla wisely is going after premium buyers, that market is niche by definition. They've done that because car is a major purchase unless if you a lot of money and you are more willing to take a chance on a new car company.

But beyond that, it doesn't matter if Tesla is building a better car, it matters if consumers think Tesla is building a better car. And tesla doesn't have the same brand loyalty in a very competitive market.

Secondly, if you're buying an electric car for environmental or gas price reasons, there are other options. I can lease a Nissan Leaf now for $199/month. The amount of money I save on daily gas cost driving my Honda will almost come to $199! It means I can have a car for 3 years for free (minus the $2000 singing fee). Tesla just can't compete with that!

[ChuckMcM]

Ok, I see where you are coming from. But aren't you getting ahead of yourself? The luxury car market is what, 1 million cars annually [1]? So these 'niche' cars which have good margins give Tesla the capital to do the next step which is bring the costs down.

I think folks who drive a model S will pretty quickly understand that Tesla is building a better car, so if someone was in the market, and open to an electric, Tesla is a contender.

I expect the majority of Tesla's sales to be 'status symbol' sales initially (just like Hummer's sales) and later a more durable market will develop. And I think it will benefit from being considered the 'best' you can get, Elon is a pretty compelling figure as well so very trendy.

Where we differ I expect is that I expect they can translate that early success into a broader class of car.

[1] rummaging around in http://online.wsj.com/mdc/public/page/2_3022-autosales.html isn't particularly helpful.

[majorlazer]

I think Tesla is going after the premium buyers at the moment, but that can change very quickly if the Model S lives up to it's hype and they actually start turning a profit.

There are no cars on the market that even come close to the Model S, the Nissan Leaf has a pathetic 73 mile range. The Tesla is 10x the car the leaf is, performance and luxury-wise, and it get's almost 4 times the range on a single charge. The Model S Signature (equipped with an 85kWh battery for a 300 mile range) MSRPs at $87,900; a Nissan Leaf MSRPs at $37,250. Sure, that's a pretty significant jump in price, but when you consider the fact that the Model S competes with a BMW M5 performance-wise, you see it isn't all that crazy.

Even if you take the 40kWh Model S that will MSRP for $49,900 you can see that it's a way better deal than the Leaf. Sure, the Models is $12,650 more than the Leaf, but you actually get a reasonable range (160 miles) and the luxury and performance that the Leaf just cannot compete with.