Tesla: The Time Has Come

Assuming no cancellations of the deposits, Tesla is sold out in terms of production capacity until April or so -- of 2013. Another important aspect to consider at this stage is that with only 90 days or less until the first customer delivery, no automotive journalist has yet been allowed to report on a test drive of the Model S. Tesla has provided brief test rides, but no driving opportunity yet. This means that there is no significant "performance hype" being reported in the media yet.

Yet.

But when that happens -- journalists reporting on actually driving this first-in-the-world kind of car after driving it for a few days or more -- in combination with customer deliveries taking place and testimonials forthcoming, you can imagine how the Tesla Model S will dramatically change the automotive world as we have known it for our entire lifetimes, and the same for our parents and grandparents. This moment is on track to happen by the end of July this year.

What can go wrong? I see two potential perils that a shareholder must worry about:

1. Crash testing. Tesla has been adamant about its expectation that the Model S will receive a five-star crash rating. Certainly the company has spent over three years planning for it. That said, who knows what the real-world test will yield. In the -- presumably extremely unlikely -- scenario that Tesla has miscalculated, a worst-case scenario could mean going back to the drawing board with the car's design, setting the company back perhaps three years. Looking at the shape and placement of the battery, if something does goes wrong, it could go wrong very badly. This would be catastrophic to the stock.

2. General quality issues. Building a car is more than the powertrain. The established car companies have had in some cases more than a century of experience in endurance testing. Tesla must not get only the powertrain and its revolutionary telematics system right -- it must also get all the other "boring" details right in terms of building a car that will exude quality from Day 1 to . . . many decades from now.

Fortunately, this second risk is less severe in terms of what would happen in the event of a failure, but it is nevertheless a source of worry. The press will be watching the Model S real-world performance with a hawk eye, and issues that would get no attention if they happened in a Ford, VW or Honda, will be all over the news if discovered in a Tesla. Unfair, but true.

Against the Competition

How does the Tesla Model S compare against the two leading extended-range electric cars that are currently on the market?