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) Chief Executive Officer Mike Jackson said in an interview yesterday 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 1.4 percent to $29.11 at the close in New York. The shares have gained 1.9 percent this year. AutoNation, based in Fort Lauderdale, Florida, slid 0.2 percent to $39.67.

‘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.”

Tesla has modeled its network of stores after Apple Inc. (AAPL) outlets and is eschewing the traditional auto-industry model of recruiting outside dealers to sell vehicles directly to customers. That leaves “no way in” for AutoNation to get Tesla dealerships, Jackson said.

Fisker Automotive Inc. has “a tougher way to go” than Tesla, said Jackson, who also test drove that company’s luxury plug-in hybrid Karma last week.

“Some people love the styling, some people think it’s a bit baroque, but the driving dynamics are not as good” as the Model S, he said.

Fisker Recall

Fisker said Aug. 18 that it plans to recall all its $103,000 Karma sedans to fix a flawed cooling fan linked to a California fire.

The closely held company, based in Anaheim, California, and backed by U.S. government loans, last week named Tony Posawatz, a former General Motors Co. (GM) engineer who led development of the plug-in Chevrolet Volt sedan, as its new chief executive officer. He replaced Tom LaSorda, a former president of the predecessor of Chrysler Group LLC. LaSorda is remaining as an adviser to the company.

AutoNation has no Fisker dealerships and has no interest in acquiring any, Jackson said.

To contact the reporter on this story: Craig Trudell in Atlanta at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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