Environment Transportation Why Low Gas Prices Won't Kill Tesla By Jim Motavalli Jim Motavalli Writer University of Connecticut Jim Motavalli is a journalist, author, speaker, and radio host who specializes in environmental issues. He is a regular contributor to The New York Times, Barron's, Environmental Defense Fund's Solutions, MediaVillage, and Wharton School reports. Learn about our editorial process Updated June 5, 2017 Is the sun setting on Tesla — or is it actually rising? (Photo: Tesla). Share Twitter Pinterest Email Transportation Automotive Active Aviation Public Transportation The sky is falling, the sky is falling. Tesla’s stock dipped below $200 a share for the first time in seven months, and sub-$2.50-a-gallon gas prices are being cited as the cause. So I guess that’s it then. I’m not expecting we’ll see $4 gas again anytime soon, so it’s time for Palo Alto to call in the receivers. Another electric car company bites the dust. In truth, despite reading that story arc here and here, I’m not drinking the Kool-Aid. The last time I checked, General Motors was trading for $31.75, and Ford for a bargain $14.81. And Tesla had rebounded to $218.26. Tesla isn’t going away, much as the world’s automakers (who follow Tesla closely, but mostly deny it) might want that to happen. Tesla isn’t a flash in the pan; it’s something new in the automotive firmament. The fundamental aim of the company, as Elon Musk will be the first to tell you, is not just to build a pretty good car. It’s to make one that’s better than anything else out there. The “wow” factor is crucial, which is why a lot rides on next year’s introduction of the Model X. A lot is riding on the Tesla Model X (seen at the Geneva show last year) being a hit. (Photo: Lucinho Photography/flickr) You’re still going to save a fair amount of money with an electric car vs. the gas pumps. A Volt owner told me she’s seen her payout cut in half. And I’m trying to imagine a would-be Tesla owner crunching the gas pump numbers and deciding not to buy a Model S. For many prospective owners, it’s a dream to have one in the garage, an emotional commitment. I’ve never met a more dedicated owner base. I actually know a well-to-do Model S owner who charges almost exclusively at Superchargers. He pays nothing for fuel, which is better than $2.50 a gallon. To top it off, he made a fair amount of money trading Tesla stock. Tesla sales do appear to have slowed down, but I think that has more to do with the size of the willing-to-pay-$100,000-for-a-car contingent than gas prices. It’s why Tesla has to get cranking on the much cheaper Model 3. An artist's conception of what the Model 3 might look like. I'm guessing it will be a more original design. (Photo: Autoblogvia.com/flickr) Car and Driver has a good piece by Clifford Atiyeh explaining why Tesla is likely to be durable. Among other things, it points out: Tesla has more in common with Twitter than it does Toyota. Tesla was born in Silicon Valley and that’s how the market continues to price it. The triple-digit stock price almost guarantees a roller-coaster ride for investors, and analysts readily admit that the price is based heavily on what Tesla says it will do in the future, not on its present performance. That could be called the factor. If he were to jump ship, would cause Tesla’s stock to plunge. All this is not to say that low gas prices are good news for Tesla. They’re not. It’s a problem, but more of a long-term one that will kick in when the company explores the lower end of the market. Model 3 buyers will be quite likely to be wooed away by low gas prices, as Nissan Leaf buyers undoubtedly are right now.