Morgan Stanley Predicts Very Low Tesla Model 3 Deliveries In 2017
How low can you go?
Tesla says the figure will be substantial, Morgan Stanley predicts otherwise.
In a note to investors, Adam Jonas from Morgan Stanley wrote (via Electrek):
“Following 1Q results, we have updated our model and now have a higher estimate of OP loss in 2017 and 2018. Following these adjustments (mainly higher R&D, SG&A and the impact of higher capex), we now expect Tesla to remain loss-making on a US GAAP basis until late 2019.
Our estimate of cash burn for 2017 widens to $3.1 billion from $2.3 billion previously, taking our forecast of gross cash to under $1 billion by the end of 2018. By itself, these changes to our model would have taken our price target to $292. Rolling forward the starting point of our DCF of the core business to May 1st (from Jan 1st) was an equal offset. Our price target thus remains unchanged at $305, or roughly 6% downside from the current stock price.”
Jonas warns investors that Model 3 deliveries are likely to be lower than Tesla’s forecast in 2017 and 2018. Tesla says that sales of the Model 3 should be in the 5-digit range for 2017 and 6-digit range for 2018, Jonas meanwhile disagrees. According to Jonas, Tesla will deliver no real volume of Model 3s in 2017.
Here’s Jonas’ statement of the Model 3:
“Model 3 expectations appear to have recovered substantially over the last 4 months. Earlier this year investor expectations for Model 3 hit a trough with most investors we spoke with at that time expecting zero deliveries of the model during 2017 A series of subsequent reiterations from management and the spotting of release candidates testing on public roads have increased expectations of timing and volume significantly.
Although we cannot quantify what the market expectation is at this point, we believe our forecast of 2k Model 3 deliveries this year is substantially below current market expectations. Looking to 2018, we believe our 90k volume forecast is also far below Street expectations, possibly one-half or one-third market expectations for Model 3 volume next year.”
Those figures are not even in the same ballpark as Tesla’s projections:
“Simultaneously, preparations at our production facilities are on track to support the ramp of Model 3 production to 5,000 vehicles per week at some point in 2017, and to 10,000 vehicles per week at some point in 2018.”
Our own predictions here at InsideEVs, from Tesla’s original Q4 report (in February) that touched on production for 2017, pegged actual deliveries between 25,000-35,000 this year – so the range estimate in the industry is clearly fairly wide.
Clearly the Model 3 and its roll-out will be one of the top stories for the second half of 2017.