Tesla Stuns Some Investors With Ambitious New Target.
“Tesla is pushing the boundaries. We believe it can deliver”
“On our current forecasts, we don’t predict Tesla will achieve 500,000 units of volume before 2025”
Tesla Motors pulled forward its 500,000 annual car production forecast by 2 years to 2018 in a hard-to-believe, hubristic sounding move, but some investors weren’t fazed.
“As ever Tesla is pushing the boundaries and looking to achieve the seemingly “unachievable”. We believe it can deliver,” said investment researcher Evercore ISI analyst Arndt Ellinghorst.
Morgan Stanley analyst Adam Jonas wasn’t so sure and stuck with his forecast for 2018 of 108,000 vehicles.
After reporting first quarter financial results, when its net loss widened to $282.3 million from $154.2 million in the same period last year, Tesla said it would build 500,000 electric cars in 2018. At the same time it said capital spending will accelerate too, and this may entail selling new shares or issuing new debt.
The Financial Times Lex column wasn’t impressed, even though 400,000 people have put down $1,000 for the still prototype Model 3.
“’Mania’ is one word. Tesla Motors prefers to call it implied revenue of $14 billion. The electric carmaker is counting chickens too soon: the deposits for the new Model 3 are refundable, and even if most would-be customers genuinely intend to buy the car, Tesla must still meet high expectations at the advertised price of $35,000 without an extended delay,” Lex said.
Morgan Stanley’s Jonas said in a report that CEO Elon Musk’s new sales target calling for 1 million vehicles in 2020, was four times higher than his current forecast of 248,000.
“While not impossible, we view 500,000 units of volume by 2018 as too high to model as a base case. We would even describe 500,000 units as above any bull case we would be prepared to model at this stage,” Jonas said.
“On our current forecasts, we don’t predict Tesla will achieve 500,000 units of volume before 2025 – 7 years after their current target – and we do not reach 1 million units in our forecasts at any time before 2030,” Jonas said.
The Financial Times’ Lex said Tesla’s high share price in relation to its financial progress has always required confidence that the company will deliver great long-term sales growth.
“But until now it was also underpinned by the prospect of becoming self-funding in the short-term. Tesla, which has burnt through $3.5 billion in two years, is dousing the flames with its least-favourite commodity: petrol,” Lex said.