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Tesla’s Spilled Secret May Be Its Smartest Move Yet (TSLA)

It’s no news that Tesla Motors(NASDAQ: TSLA ) has major expansion plans. But with its car cards on the table, investors are wondering why CEO Elon Musk spilled the beans on new developments before maximizing sales for current car models. This physics major knows there are reactions to every action, and his move may be more calculating than we think. Here’s what you need to know.

Spoiled surprise
Shares of Tesla are up 180% this year, but the automaker isn’t worried about making market moving announcements. After Q1 deliveries of its Model S clocked in at 4,750 units, 5.5% above expectations, Elon Musk is already moving on to next-generation models.

The CEO recently revealed plans for a new sedan and compact SUV with $35,000 price tags and 200-mile ranges. That cuts consumer costs in half, scoring major points for Musk’s mass-market musings. As fellow Fool John Rosevear recently noted, Tesla’s vision is to become “the electric version of a car company likeBMW.”

But bears are worried that Musk may be mouthing off a bit too soon. If car shoppers are tempted by Tesla’s future offerings, this newest announcement might put off their purchases until newer, cheaper models hit the lot. Is this possible? Absolutely? Is it what Musk wants? Absolutely.

Out with the old
Tesla built its business on the back of its Tesla Roadster, Model X, and Model S, but less efficient technology and a prohibitive price put these models out of want and out of reach for most consumers. Musk knows that these most recent announcements might minimize sales for current models, but that means maximized sales for its upcoming additions. With mass appeal comes increased brand power, economies of scale, and a market presence on par with other luxury competitors.



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