Tesla Model S

Low Gas Prices Spell Bad News For Tesla

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Tesla Model S

Tesla has been on quite a roll with the Model D making big news and the upcoming Model X getting oodles of preorders, but news this last week hasn’t been quite so good. The company’s stock has fallen 14% in just seven days of trading and it can largely be blamed on the falling price of gasoline.

The price of gas has dropped over the last 68 days to a current national average of just $2.67 per gallon. That’s news to cheer about if you drive a car that isn’t an electric or hybrid, but for companies like Tesla, it’s actually bad news.

Remember when gas prices first shot through the roof and everyone ran out to trade their giant, gas-guzzling SUV for something smaller and more fuel efficient? Yeah, that’s not happening anymore with gas prices falling so low. Gas prices are the lowest they’ve been since September 2010 which means people don’t feel the need to go hybrid or electric like they did at one time. Those who want their car with a combustion engine can have it without going broke.

Testament to this fact is that estimated Tesla Model S sales for November were at a three-month low of 1,200 units and represented zero growth from the same month last year. The number is an estimate due to how Tesla reports their numbers, bunching them all together rather than breaking them out by country.

These sales numbers combined with the drop in gas prices means investors aren’t as hot for Tesla stock as they were a few months back. Despite the current slide in the stock’s value, it’s still performing well overall with a 42% increase for the year.

There are other factors that could be affecting the sales numbers beyond the price of gas so it’s not all doom and gloom for the automaker. Some buyers may be holding off to get their hands on the all-wheel-drive model, especially with winter looming.

Others may be holding out for the Model X which is due for its first customer deliveries in the third quarter of 2015. This possibility is supported by the overall numbers for the EV and hybrid market which Automotive News reports as showing a modest 1.6% increase from October to November.

The slip in Tesla’s stock price is a reaction to their current sales and their future prospects, but those sales figures stand a good chance at increasing in the next few months. It might turn out to be a good time to buy Tesla, especially if gas prices surprise us all and take another jump into the stratosphere.