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DENZA EV From Daimler Is The First Credible Threat For Tesla

|About: Tesla, Inc. (TSLA), Includes: DDAIF

190-mile all electric range is practical.

$40k price after rebate (China) is compelling.

Less than 1-hr super charging capable.

0-60mph acceleration 14 seconds.

Daimler (OTCPK:DDAIF) partnered with BYD to create the Denza, an all electric sedan available for delivery September, 2014. This is a notable development for Tesla (NASDAQ:TSLA) investors because the Denza offers many features of the Tesla Model E and at similar price point.

The most important feature is the all electric range of 190-miles using 47.5 kWh lithium battery. This is quite close to the daily-use Tesla Model S range of 220 miles that maximizes battery cycles. (85 kWh battery)

The main characteristic of the Denza that is a negative compared to Tesla is the 14-sec 0-60 acceleration. This is much slower than the Tesla Model S sub-6 second time.

Tesla Model E will not be shipping until 2016. This gives Denza a two+year lead ahead of Model E in China. Given China will be a key market for Tesla, this will impact Tesla after 2016. In the short term, the impact on Model S sales in China is less clear. Given Denza price is less than half of Model S price in China, some buyers may opt to get the Denza as their first all electric sedan instead of Model S.

In addition, once Denza irons out early production issues and ramps up, it will very likely arrive in ex-China markets. With its 190-mile range, it has sufficient range to alleviate day-to-day range anxiety even for U.S. drivers. The arrival of Denza in the U.S. market will open a new era of practical electric cars. This is a milestone that many Tesla investors have been looking forward to with the arrival of the Model E.

The question that must be faced now by investors is what Tesla will do to win this battle? Can Tesla beat Denza in China? If Tesla cannot beat Denza in China, how can Tesla stay ahead anywhere else in the world?

The story is unfolding and worth watching to discern the answers to these questions.


Denza website (English):

Denza China subsidy:

Denza charging

Disclosure: I am long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.