Gene Munster thinks Tesla may have a hit with its new Model 3 sedan.
The Minneapolis tech analyst-turned-venture capitalist said Thursday that the new model will be less expensive to own than most people think and may appeal to more buyers than investors and competitors believe.
The $35,000 car, which is scheduled to roll off Tesla's California assembly line for the first time on Friday, marks the 14-year-old company's first attempt to reach mainstream buyers. Until now, it produced a roadster, sedan and SUV at prices starting at $70,000.
Munster, founder of Loup Ventures and former technology industry analyst at Minneapolis-based Piper Jaffray, compared the likely cost of owning a Model 3 to an entry-level Toyota Camry, one of the nation's top-selling sedans, and found that the Tesla's overall costs would be just 13 percent greater over a five-year period.
While the Toyota, at $26,700, is less expensive, its fuel costs over the ownership period will be greater than the costs to charge the Tesla. Lower repair and maintenance costs also benefit the electric vehicle, he said. On Camrys that have more features and are more expensive, the difference in total ownership costs would shrink more and may tilt in favor of the Tesla.
In his report, Munster compared the launch of Tesla's Model 3 to the turning-point that happened 10 years ago at Apple Inc., the company he followed closely for years at Piper. "We believe we will eventually look back at the launch of the Model 3 and compare it to the iPhone, which proved to be the catalyst for the shift to mobile computing," Munster wrote.
He added that the consensus among auto analysts is that Tesla's potential market in the U.S. is 1 million to 4 million customers. "However, based on our cost of ownership work, we believe the Model 3 expands Tesla's addressable market to about 11 million vehicles per year in North America alone," Munster wrote.
That's essentially the entire U.S. car market and more. Americans bought about 17.6 million new cars and trucks last year, a record, with more than half of that figure light-duty trucks and SUVs.