Electric Car Maker Tesla Value Rating Dropped - Duh! Says We

Electric Vehicles - Solution or Diversion?

NEW YORK December 8, 2011; The AP reported that shares of Tesla Motors Inc. tumbled Thursday after a Morgan Stanley analyst cut his rating and price target for the electric car company, saying that consumer interest in electric vehicles hasn't been as high as he previously expected it would be.

Analyst Adam Jonas cut his rating for Tesla to "Underweight" from "Overweight" and slashed his price target by $26, or 37 percent, to $44.

Jonas said electric vehicles overall "are not ready for prime time" and will be slow to catch on with drivers. (Ed Note: what has taken the smart guys so long to recognize that EV's won't work in 95-99% of America?)

The Palo Alto, Calif., company currently sells just one car, the $109,000 Roadster. The Model S, a four-door electric sedan expected to launch this summer, is supposed to cost about half that, appealing to more people.

The company has said sales of the Model S should allow it to grow its revenue "very substantially" starting next year.

The Model S will likely launch on time, but sales growth will be slower than investors expect, Jonas said.

For the entire market for electric vehicles, Jonas said he expects them to make up 4.5 percent of the total auto market through 2025, down from his previous prediction of 8.6 percent. He cut his outlook because of improvements in gas engine technology, recent lower fuel prices, disappointing sales volumes of electric cars earlier this year and the weak European economy.

But if gas prices rise to $4 a gallon, electric vehicle numbers could move closer to the original estimate, he said.

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