Oh, Jeez. Morgan Stanley Analyst Takes Tesla Down A Peg — Model 3 May Be 1 Yr Behind AND Produced At MUCH LOWER Volume

Tesla has been one of the most interesting stories to ever happen in the automotive industry. An Elon Musk upstart that has changed MUCH about the industry as we know it today, the electric vehicle manufacturer is preparing to launch its biggest model yet.

Dubbed the Model 3, it's aiming squarely at cars like the BMW 3-Series and Mercedes-Benz C-Class.

Musk has been very aggressive with setting timelines and expectations for this vehicle, which is a bit rich given his history of being late. Turns out we're not the only ones with a raised brow. A Morgan Stanley analyst covering the auto space released a note yesterday that had much different forecasts than what Musk has promised.

For example, this analyst is thinking the launch of the Model 3 will happen at the end of 2018. And when production does kick off its volume will be around 60,000 units in 2019. Note: Musk has said that TSLA will produce a 400,000 units in 2018.

So, who do YOU believe?

Adam Jonas, a Morgan Stanley analyst assigned to cover Tesla, has once been described by the New York Times as a ‘Tesla Cheerleader‘ for his favorable coverage of the company and always higher than average price target on Tesla’s stock...

...Tesla says that the Model 3 will enter production in mid-2017 with volume production toward the end of the year.

In a note sent to clients today in which he slightly reduced his price target on Tesla from $245 to $242 following the company’s third-quarter results and SolarCity acquisition, the analyst reiterated a prediction that we apparently missed before:

“We continue to forecast a Model 3 launch at the very end of 2018 (more than 1 year later than company target) with 60k units in 2019 and 130k units in 2020.”

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MDarringer - 11/24/2016 1:54:55 PM

+2 Boost

Oh dear.

TheSteve - 11/24/2016 2:28:48 PM

+2 Boost

These have been the widespread concerns of analysts for years regarding Tesla, and Tesla has a long track record of not being able to do what it says it will do (e.g., can't meet its self-imposed sales targets, can't meet its self-imposed production schedules, can't meet its self-imposed growth rate, etc.)

It's one of the reasons I see Tesla as "not yet out of the woods."

SanJoseDriver - 11/24/2016 5:04:01 PM

+2 Boost

He doesn't really provide any evidence for why he thinks this is the case. We'll just have to wait and see if Tesla can hit their 2017 target.

nguyenvuminh - 11/27/2016 12:24:23 AM

+2 Boost

I know those Wall Street analysts are plenty smart, having gotten their MBA degree from Harvard and Wharton and all but as a profession, I don't think they should shout too loud given their great calls over the years. I mean the 1987 debacle, 2000 Internet Bubble, 2008 Crisis, etc. And throw in the index mutual funds' better performance than the actively managed funds since Vanguard's introduction in 1972. We only hear about their correct and successful picks but we don't know 10% of their dogs ... with fleas. They will likely being correct on Tesla at some point in the future so until then, everyone has a chance to stand on the soap box. If they are so down on Tesla, they should short the stock with their own (and their children's college education) money.

Holydude - 11/27/2016 6:43:43 PM

+2 Boost

A lot of redneck trailer trash Trumpies here apparently, fucking joke really.

SanJoseDriver - 11/28/2016 3:06:31 PM

+1 Boost

There is too much on the line for Tesla to miss their 2017 target. I am 100% certain they will start delivering Model 3s next year, but am more concerned on when they will hit volume production. Q4 is their official target for volume (2-4k cars a week). They currently make 2k cars a week today, so they will have to double or triple production within a year. They have done it before, but at far lower volume.

Unlike the Model S or Model X, Tesla has several things going for them for the Model 3:
- Lower risk, they are not introducing any crazy innovations like fancy doors this time around. It is an iteration focused on reducing price, not pushing limits.
- Model 3 design is focused on mass production, uses 1,000+ fewer parts and supports higher levels of machine automation in assembly.
- Suppliers are taking them seriously now, and they are being brutal with their supply chain and cutting vendors that are not able to deliver.

We'll know in 6-8 months how the timeline really looks.