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Tesla Model S Is ‘First-Rate Car,’ AutoNation Chief Says

Tesla Motors Inc. (TSLA)’s Model S luxury sedan is a “first-rate car” that will attract limited demand because of its price, the chief executive officer of the largest U.S. auto retailer said.

The Model S is “the best electric car I’ve driven yet,” AutoNation Inc. (AN) CEO Mike Jackson said in an interview before a speech to the Rotary Club of Atlanta. “The economics will still be the limiting factor. It’s still very expensive, but it’s really a first-rate car.”

Tesla CEO Elon Musk is counting on demand for the Model S, his company’s cheapest model to date, starting at $57,400, to help the Palo Alto, California-based automaker record its first quarterly profit. Jackson, 63, test drove the sedan on Aug. 15 while visiting a showroom near the automaker’s headquarters.

Tesla is expanding production of the battery-powered Model S at its Fremont, California, plant with a goal of delivering 5,000 this year and 20,000 in 2013. Musk, who is also chairman of the company named for inventor Nikola Tesla, expects the electric-car maker to report its first profitable quarters next year.

Tesla fell 1.7 percent to $29.51 at the close in New York. The shares have gained 3.3 percent this year. AutoNation, based in Fort Lauderdale, Florida, slid 0.3 percent to $39.75.

‘Very Expensive’
The Model S “has very good design, fit and finish is good, driving dynamics are good,” AutoNation’s Jackson said. The $57,400 base version has 160 miles (257 kilometers) of range and the price rises to as much as $105,400 for a “Signature” edition with a 300-mile range, before a $7,500 federal tax credit. The price of the technology will limit demand, Jackson said.

“Electric vehicles, all-in, when we’re sitting here three years from now, are still less than 1 percent of the market,” he said. “They’re very expensive.”

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