Olivia Pratt
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Analysts Predict Tesla Adding All-Wheel-Drive to Model S

Tesla Motors Inc. (TSLA) will probably unveil an all-wheel-drive variant of the Model S luxury sedan on Oct. 9, said analysts including Brian Johnson at Barclays Plc and Ivan Drury at Edmunds.com.

The move would better position the electric-car maker in cold-weather markets such as New Yorkand Boston where many consumers demand all-wheel drive for use on snowy, wet roads. It would also better align Tesla against top luxury brands including Bayerische Motoren Werke AG’s BMW, Daimler AG’s Mercedes-Benz and Toyota Motor Corp.’s Lexus.

“Would it make sense as a logical move? Completely. Would Tesla gain sales? Certainly,” Drury, a senior analyst at Edmunds, said in a telephone interview yesterday. “Tesla has nothing to lose by offering all-wheel drive, especially when every one of its competitors offers it.”

By adding that capability, Tesla might gain the most in the Northeast, where the feature could make drivers “that much more confident that the vehicle can get them where they want to go regardless of outdoor weather conditions,” said Karl Brauer, senior analyst at Kelley Blue Book.

Tesla Chief Executive Officer Elon Musk on Oct. 1 posted on Twitter that the Palo Alto, California-based automaker would “unveil the D and something else.” The billionaire included a photo of a darkly lit, partially hidden Tesla and the Oct. 9 date.

Elizabeth Jarvis-Shean, a Tesla spokeswoman, yesterday declined to comment about the analysts’ remarks on an all-wheel-drive Model S.

Driver Assistance

Barclays’s Johnson wrote in a note that Tesla’s announcement will probably include a “dual motor Model S,” to provide all-wheel-drive capability, and “driver assistance systems.”

A person familiar with the carmaker’s plan said on Oct. 3 that Tesla will make its first foray toward automated driving, joining its rivals in offering technologies such as a feature that can keep the car in its lane.

From 2009 through the first six months of 2014, the rate of premium luxury buyers who opted for all-wheel drive rose to 46 percent from 33 percent, according to data compiled by Edmunds. The demand for all-wheel-drive transmissions, which let all four wheels propel the car, increased in the mid-2000s, said Brauer, the Kelley Blue Book analyst.

After all-wheel drive became popular in sport utility vehicles, consumers decided they wanted it in cars as well, he said. Now, particularly in the luxury market, it’s “seen as an expected option,” he said.

“Even on dry pavement, all-wheel drive provides a performance benefit because it can help you turn a corner more accurately and responsibly,” Brauer said.

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