GENE MUNSTER: Tesla's Model 3 launch will be as big as the introduction of the iPhone
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Munster, who has covered tech behemoths like Apple, Google, and Amazon for decades, is bullish on Tesla and has argued that the electric car maker resembles the early days of Apple.
"Over the next 10 years the Model 3's value, in combination with its technology, has the potential to change the world and accelerate the adoption of electric and autonomous vehicles," Munster wrote. "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."
The Model 3 is Tesla's first mass-market vehicle priced at $35,000 before federal and state tax incentives. Tesla will deliver 30 Model 3 sedans on July 28 and ramp up production to 20,000 cars per month by September.
The low cost of the Model 3 allows Tesla to tap into a bigger market than ever before.
Munster was a senior analyst for Piper Jaffrey for 21 years until he left in December to launch Loup Ventures, an early-stage venture capital fund focused on augmented reality, artificial intelligence, and robotics.
Loup Ventures did a cost analysis of The Model 3 and found it's more affordable than the Toyota Camry, the fourth-most popular vehicle in the US, without factoring in tax breaks.
"Consensus thinking is the Model 3 expanded Tesla's addressable market from about 1 million cars a year to 4 million cars a year," he wrote. "However, based on our cost of ownership work, we believe the Model 3 expands Tesla's addressable market to about 11m vehicles per year in North America alone."
The Camry is in a completely different segment from the Model 3, but Munster said the electric sedan is ultimately cheaper when factoring in the price of fuel, insurance, maintenance, repairs, and technology.
That last point is key to Munster's argument.
Tesla is collecting data from the tens of thousands of vehicles already on the road, allowing it to advance its AI to the point where a Tesla will drive itself between Los Angeles and New York by the end of the year.
The automaker also plans to launch Tesla Network, which would allow owners to temporarily add their car to a self-driving fleet and make money off the vehicle when it's not in use.
It will likely be several years before Tesla's self-driving tech and fleet come to fruition. But the low cost of the Model 3 combined with the value of Tesla's future tech releases could catapult it to the level of the iPhone, Munster said.
For Tesla to really tap into the mass-vehicle market, it will need to double its production capacity next year and do it again in 2018.
The electric car maker has struggled with production and reported light delivery numbers for the second quarter.
"Hardware does not scale as easy as software, but it can scale," Munster said. "Looking back at the iPhone in 2007 it was a stretch to envision the company producing 50m phones a year, but in 2015, the company sold 232m units."
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