Tesla Analyst: First Model 3 Deliveries Expected “At Very End of 2018”

NOV 25 2016 BY ERIC LOVEDAY 72

Tesla Model 3 - Image Via Datcode on Imgur

Tesla Model 3 – Image Via Datcode on Imgur

Tesla Model 3 - Image Via Datcode on Imgur

Tesla Model 3 – Image Via Datcode on Imgur

Though Tesla’s official stance still is volume production and deliveries of Model 3 in the second half of 2017,” some doubters, including a long-time Tesla supporter, are suggesting that this timeline won’t hold true.

Adam Jonas, a Morgan Stanley analyst assigned to cover Tesla, has often been favorbale of the automaker, but more recently, Jonas has viewed the automaker with a somewhat pessimistic eye.

In a recent note sent out to investors, Jonas put an “Equal-weight” rating on TSLA and reduced his price target to $242.

Additionally, Jonas predicts that the Model 3 will be late to launch by over 1 year:

“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.”

It’s not just the delayed launch that has investors uneasy though. According to Jonas, volume will be significnatly lower than Tesla’s predictions. Tesla continues to suggest that somehow it’ll make 400,000 Model 3s in 2018 (a figure we too think is unachievable), while Jonas says the automaker will make just 60,000 units in 2019 and 130,000 Model 3s by 2020. Clearly the numbers don’t line up.

But Jonas does have a long hitsory of being accurate when it comes to Tesla, so…

Jonas adds:

“The bigger mission remains developing a sustainable transportation ecosystem. We estimate Tesla’s global fleet drives around 5 million miles per day with around 1/3 of these miles on autopilot. We also estimate the pace of daily miles traveled to double in just over 1 year, putting Tesla in a very unique position to push the state of the art of algorithmic driving and machine learning in personal transport… key pillars of accident free driving. The statistically significant safety data analysis can have a potentially powerful impact on perceptions of regulators, consumers and investors.”

Less than a year away from Tesla’s targeted launch date, we’ve still yet to see the production 3. It may be shown next Spring, but that’s not guaranteed.

Here’s our take…volume production and deliveries of Model 3 in the second half of 2017,” minus “volume” from the statement and Tesla may be right. Add “volume” back into the equation and we tend to think Jonas’ “very end of 2018” may indeed end up being more accurate, as Tesla’s track record at hitting deadlines, and then achieving volumve production thereafter has not been the best.

Source: Smart Stock News

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72 Comments on "Tesla Analyst: First Model 3 Deliveries Expected “At Very End of 2018”"

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And so it begins. . .

Cue conspiracies.. and now

With unsubstantiated WAGs from some analyst? It won’t “begin” until somebody has concrete evidence that Tesla’s targets are no longer attainable.

Chris – This analyst covers Tesla for a major brokerage/investor house that has multi-millions invested in Tesla. Not only does he get to ask Elon questions on the quarterly conference calls, but he also attends a special and private investor day which Tesla presents and allows exclusive access to execs. While limited information is disclosed, these analysts are good.

I’m sure if he is any good he will have no trouble providing bullet proof evidence for these rather bold claims.

Cue crickets…

Don’t be naive, these people are not about truth, they are about speculative games.

And your bullet proof evidence to the contrary is?

The crickets are now cued.

Nobody would make such insider knowlege public.
This is just cristal ball knowlege.

Isn’t all of Musk’s time now spent on the Model 3? (After you subtract his time for SpaceX, Getting humans to Mars, Solar Roofs, the Gigafactory)

Is there any reason whatsoever to think this guy has any real information, or is just guessing like everyone else?

“In a recent note sent out to investors, Jonas put an “Equal-weight” rating on TSLA and reduced his price target to $242.”

If you were to take him seriously, then it would mean that 2017 will be an awesome year for Model S and X and Tesla energy products.

You could also interpret it as: he needs more stock on the market at just a little lower prices, in before Model 3 arrival.

I think his *SS is Sucking Air…

He is from MS, the same company that (just by accident :/ ) raised target from $280 to $465 just 3 days after being hired to dump Tesla shares for hefty commission.
https://www.bloomberg.com/news/articles/2016-10-06/goldman-downgrades-tesla-months-after-underwriting-share-sale
So theoretically he may know more than public information, but he doesn’t need to, Tesla financial reports are public and CapEx numbers are public, and they are going downhill. As it went too far now, even such serial pumpers&dumpers are less cozy with idea of more dumping rounds. It would be more expensive if it would happen. And without CapEx scaling up production several times in a year is unrealistic.

Last time I checked Tesla got all the needed moneys off market, Pansonic is putting their share of Gigafactory monies on the table. All the cars build are sold. SC merger gets 95% acceptance vote (75% of stack holders + 20% of musk shares)….

What ever You say. Facts to the contrary are everywhere.

By the same token Tesla taught investors that while delays are huge, profits are excellent, while nobody else can even come close.

No way would Tesla have any issue to cover further CapEx required if Model 3 is slow to start / slow to start mass production.

Another Euro point of view

The thing is there is no one we can actually rely on to provide reliable info on that subject, least of all Tesla itself. Taking it from there why wasting time on that subject ? can’t we just wait and see ? That is at least what reasonable people would do.

For folks needing to replace an old, unreliable vehicle, leases ending, etc, “waiting and seeing” isn’t the advice they want to hear. The longer the delay, the more likely buyer tax credits for Tesla end and the hopes of a true <$30k Tesla disappear.

Here, look at the pictures:

Does this look like an overly complicated design ?

Compare it to the Model S.
To me the exterior looks like a simplified and smaller Model S and that interior should be waaaaay cheaper and easier to put together.
Propulsion will most likely be one of the smaller S motors.

If they don’t go crazy on HUDs and who knows what, this car should clearly be easier to manufacture. Much easier.

To me that looks like a terrible interior! I really hope that isn’t the final look.

If you find that interior terrible, well, it’s not gonna look any better in grey and black(ish):

Take a look at the rest of it and cancel your reservation if you find it that bad.

http://imgur.com/gallery/VjiaP

I like the way the inside of the Model 3 looks, just like I like the old ‘catfish’ grille of the old “S”‘s.

I call the interior of the “3” “Modern Minimalist”. Not a bad look to these eyes.

People will say it needs more controls but I think the only thing it HAS to have external to the screen is the 4-way flasher, and the parking brake.

I Agree . Nice clean Lines ,N0 Obstacles ,like buttons Dials, & switches in the way …We’ll look back in a few yrs. & Today’s Car Interiors will look old & archaic…

iPad slapped on dashboard isn’t unique idea, we have seen it in some concepts before and it looked better than in subsequent production version of the same model:

http://upload.diandong.com/2015/0119/thumb_900_600_1421638597561.jpg

But Model 3 dashboard really looks a bit too straight and raw. My guess would be that they will change it for production version.

“At Very End of 2018”
About the time the tax credits run out.

Jonas is probably factoring in the Model X delays, perhaps an honest mistake, but a mistake never less. Model ≡ is clearly designed to be manufactured in high volumes and the entire supply channel (including battery Gigafactory) is clearly ramping up for volume production in 2nd half of 2017.

Right on.

He is guessing like EVeryone else. I’m guessing it will be July 2017 for a few Beta models to start rolling out for the top 20 owners that also placed orders for the M3.

The article that is being quoted sounds like clickbait. Nothing more than an interesting title and then a bunch of nothin’ in the article. Why should we believe the “analyst” over Elon? I was glad to see the Eric Loveday reporting this critically.

My guess is that the M3 will be on target, or almost on target. The M3 is simpler, it has no gull wing doors, and Tesla now has a lot more experience with rolling out new models.

Errrr… Wut? This so-called “analyst” thinks the Model 3 is going to be almost one-and-a-half years late into production!?!? That dude needs to lay off whatever he’s smokin’, and then find some other line of work. Look, I don’t expect Tesla to actually meet the planned date* for production start of July 1, 2017. Even Elon Musk admitted that date was likely “impossible” due to supplier issues: https://www.cnet.com/roadshow/news/elon-musk-says-production-deadline-for-model-3-impossible/ I’m sure some will point to the Model X’s approximately two year delay as a reason to believe the Model ≡ will be similarly delayed. Such people not only ignore the fact that the M≡ will be a simpler car, they also ignore the much more important factor that Tesla’s business model and income didn’t ever depend on getting the MX into production in a timely manner, whereas Tesla’s business most definitely does depend on getting the M≡ into production as soon as possible after the Gigafactory starts producing battery cells in quantity. Tesla can’t afford to spend billions getting the Gigafactory up and running, and then have that huge investment just sit there and generate lots of expenses but very little income for them (nothing but sales of PowerWalls and PowerPacks),… Read more »

I expect Tesla will push like the devil to at least deliver a few token Model 3s at the end of 2017, like they did with the Model X in 2015.

Follow that with several months at a trickle as production issues get smoothed out, then quickly ramping by mid-year. End of the year 2017, I expect they’ll be making ~10,000/month.

I regard these guesses as modestly optimistic.

Before the first Roadster was sold, more articles & FUD distributors than I could count called Tesla vaporware. Tesla was supposed to fail at every turn.

They’re still here guys. They may be slower ramping up than I would like, but I don’t think they will be anywhere near a year late.

I wouldn’t go as far as to call his “recent note to investors” FUD. Here’s why :

“Jonas has a $333 price target

It is interesting that Jonas uses the average of his Base and Bull cases ($252 and $413, respectively) and assumes that a mobility app is likely to be announced in the next 12 to 18 months even though there is uncertainty as to if, when and how this product unfolds and how much the market will pay for it.

In his Bull case he estimates that the core business is worth $233 per share and that Mobility adds $130. I think he is going out on a very long and thin limb by including Mobility in his price target. He also adds $50 for Tesla Energy.”

“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.”

As a Model 3 reservation holder, I hope this isn’t the case! With that said, assuming a 6 to 12 month slip and a production ramp that isn’t super human … this forecast doesn’t seem unreasonable. I hope the Tesla team can ramp faster, without sacrificing quality, and we’ll see the Model 3 earlier than Adam’s forecast.

Does anyone have historic information on 1st year production rate for a completely new auto model? This might provide context on how aggressive the Model 3 production goal is.

I can tell you without citing any sources what so ever that the Model 3 production goal is VERY aggressive. For obvious reasons.

May be. out Mr. Jonas went on the factory tour and got the inside scoop?

I respect Adam Jonas. His is not a bearish outlook.

I won’t mind if it’s a little late. I’m enjoying my used S while everyone waits. Also, less congestion at the super chargers.

Some new players are entering the fray, supposedly Toyota making some breakthroughs, Kreisel electric giving lectures to German OEMs , so if any significant pushbacks are about to happen they are more to be attributed to newcomers rather than to Tesla itself. Probably Tesla wants to let the dust settle and see what the new competition is capable of.

How close is Morgan Stanley to Tesla?

Morgan Stanley role in Tesla (incomplete, I’m sure):

2010: IPO underwriter (4.66M shares)
2013: Underwriter to Convertible Bond Issue ($150M) and extended personal loan to Musk for $25M against pledged shares
2014: Underwriter to Convertible Bond Issue ($140M to 2019 notes and $210M to 2021 notes)
2015: Underwriter to share issuance (836,359 shares) and to Asset-Backed Loan instrument ($80M)
2016: Underwriter to share issuance (3,255,814 shares)

They have to keep a “Chinese wall” (sorry, not my choice of words — google it) between their analysts and anybody who worked on those transactions. There can be zero inside information passed between the two. So this analyst cannot have any inside information from any of that work.

Any suggestion that this story is based upon insider information is absurd. Unless of course you are suggesting that they should all be arrested for violating insider trading laws…

Nix, I’m well aware of “Chinese Wall”. I’m also well aware of Jonas’ amazingly prescient “predictions” like this one posed in the Nov ’15 conference call, a few weeks after he pronounces a $450 price target: _____________ Jonas: Elon, just thinking longer term here, assuming Tesla establishes itself as a leader in autonomous transport, do you see a business case for selling autonomous cars to ride-sharing firms, or can Tesla cut out the middleman and offer on-demand electric mobility services directly from the company’s own platform? Musk: I think we’d have to say no comment. J: I mean, Elon, it’s kind of unusual for you to punt on strategic questions of a long-term nature. Is this a dumb question? Or a funny question? M: Actually, I think it’s quite a smart question, actually. J: Why — all right. M: But still no comment. __________________ By wild coincidence Tesla announces their intentions to take this direction shortly thereafter. Shares rip from the 210’s to over 243 by years’ end, during which MS sells a material amount of their holdings. Anyway, there’s nothing about what I posted that implies “insider trading”. If the brokerage reveals material indications but doesn’t act in advance… Read more »

A company’s analyst giving stock advice, such as target prices, based upon inside information would indeed be considered “acting on” inside information.

He can be right about everything based upon his own research, and yet he absolutely cannot be getting any inside information from which to base his professional opinions.

So any mention of prior transactions between Tesla and his company, as if it were proof of him having inside information is either false, or evidence of a crime. And I don’t think there is any reason to think they would willfully violate the law just because of this article.

Simply said, you cannot use their previous transactions to say he has inside information. No matter how well he has done in the past.

I hope this makes sense to you.

There is “Chinese wall” between research and investment banking divisions.
But there are no walls between analyst and the rest of the bank other than investment banking, and he does what is beneficial for the bank if he wants to work there.

Are you trying to imply he is basing his public comments on insider information from somewhere else in the company?

Not for these delivery expectations.
But there are plenty of public information too that average blog reader would not bother to read, or would not pay attention to, or would not consider significant, or would not be qualified enough to understand.

Yes, he is basing it off of public information, just like the rest of us.

Which makes it pointless to mention deals to which he would have absolutely no access to information from those deals. Chinese wall.

“Very end of 2018” sounds like 2019 to me. And the car will likely be problem plagued as well.

I can’t stand a car company using its customers as Beta testers.

Only if the Fremont factory survives a possible quake in 2017 and if they manage to put out a somewhat likely fire at the Gigafactory in 2018.

“I can’t stand a car company using its customers as Beta testers.”

I can’t stand a car company that got people severely injured and killed by saving 57 cents on a part.

I think Tesla is highly motivated to be viewed as credible when they make promises. If they were behind on reaching their target for M3 production, then I think they would have been dropping hints by now.

So I contend that Tesla believes they are still on target. And it is hard for me to imagine their estimates being *that* far off.

The whole reason for a huge push for huge numbers of M3’s in the first year of production is to maximize the number of people getting $7,500 and $3,750 dollar tax incentives as the federal tax incentive sunsets. If this analyst is factoring in the fact that for the last 6 years, the official House Budget Proposal removes ALL federal consumer and commercial production incentives for ALL green energy, he may end up being right. It is highly likely that the federal tax incentive could be killed much sooner than planned. IF that happens, there would no longer be any urgency to push out the Model 3 in large numbers as soon as possible in order to maximize the incentive. Elections have consequences. And while Tesla will certainly continue to build the M3, it will cost more to consumers, and that will reduce sales. This isn’t just crazy talk, anybody can go and look up the “Energy” sections of the Proposed House Budgets for the last 6 years and read for themselves what they say about switching to only funding “research” and stopping incentives for actually building and selling actual green energy products (like EV’s). Anybody who thinks that the… Read more »

I don’t live in the US so I don’t understand how your incentives work, but does Tesla get an incentive to build the car and/or does the consumer get the incentive?
Given the huge number of reservations, I personally would be working on the premise that I am paying $35k (or more) for the M3, and then if I get an incentive that is a bonus. That way you are not disappointed or cancelling your reservation because the incentives were ended our reached their limits.

The incentive goes to the consumer. The complicated part is how the incentive sunsets. After 200,000 units sold in the US, the incentive goes through a complicated process of dropping from full incentive, to half incentive, to quarter incentive, to zero over roughly the next year.

Yes Nix,

Unfortunately there are a few cheerleaders even here for the new normal Republican Party now dominated by the Alt Right proto-fascists.

Tesla and EVERTHING Clean Tech is in for a rough ride along with the whole country.

So let me get this straight, the Republican Party is *dominated* by… 4chan? You do realize the bulk of the “alt-right” is nothing more than trolls, right? My god, you are like Oprah- taking the bait so easily.

I’m laughing at the fact that the media is actually selling people on the idea that the alt-right is somehow a legitimate political wing. Not only is the media getting trolled, but the REAL nazis and kkk members are getting trolled too, because they are being convinced that there is somehow some kind of awakening happening- getting flushed out for all to see. But their voice unfortunately only reinforces this idea that the alt-right actually exists in any real capacity.

My god, are people really this clueless?

No, you don’t have to worry about the “Alt-Right” stripping the tax credit. It might not be renewed (and that would be a problem for Tesla Model 3), but it will not be cut prematurely.

Yes, some of the left is that clueless. I am a bit to the right of most, and have been donating to some Republican candidates the past 10 years or so, and I hadn’t heard of the Alt-Right until the Dem’s brought it up a couple months ago. The Alt-Right is the nutter fringe of the GOP and has about as much to do with where the Republican party is going as the dog next door does to the rise of the moon. The dog might start howling as the moon is rising, but that doesn’t mean the moon is going to listen to the dog. To get back on topic, I really think the III will get delivered in 2017, albeit in very small numbers. I don’t think the III will see a monthly delivery number over 1,000 until March of 2018, but by the time summer of 2018 rolls around III deliveries will be looking a lot better. I think the III is going to be a great car, but you will not be able to use a full tax credit to buy a base model III because the base III’s won’t arrive until 8 or 9 months… Read more »
LMFAO, your analogy of the dog is actually approriate her Ziv/kubel if you don’t realize that the Alt-right tail is wagging the Republican Dog now. Yes, the Alt-Right is a relatively small number of fringe nutters and trolls being financed by the dozen or so of the billionaires (like the Koch Heads) who now own the Republican Party lock stock and barrel. You seem to forget that President is automatically the head of their political party. Trump himself is part of the Alt-Right as evidenced by his “leadership” of the rascist Birther Movement against Obama and of course his cadre now of Bannon of Brietbart and many other extremists. Likewise, Trump and the Republican Party has long-since become an anti-science and anti-intellectual movement based primarily on negative emotions and denial of basic facts like man-made climate change (something you yourself have stated you share in). So yes, despite your denial, the Republican Party is now a far-right political party that would label even a reincarnated Ronald Reagan as a leftist. Trust me, this will not end well for anybody and least of all for clean tech, EVs and what’s left of our rapidly diminishing environment and that’s if the psychopath… Read more »

Good luck. With a full blown and proud sociopath as president, followed by the closets you got to afghan talibans, you will need it.

+1

I don’t see how they make their date, price (in a meaningful way, I don’t mean just taking orders and delaying delivery on base models while you upsell people) or volume.

But this is way more pessimistic than I am on date.

Does he publish his research or just his conclusions? If he has info about supplier ramp-ups and such then I’d be inclined to believe him, but otherwise I am suspicious.

The reality is, Jonas IS guessing. If there are short memories on history, I would suggest it is not on Tesla past model S, & X delays, which are colouring or clouding his understanding of Elon’s urgency to accelerate Model 3 production to sooner and higher volumes, due to far greater reservation deposits than even Elon’s usually optimistic expectations. Also, how many Model S or Model X prototypes were built for road testing versus how many Model 3’s will be built for testing? (Remember that article of Tesla already ordering parts for 300 Model 3’s?) I suspect between January 2017 and March 2017, they will have built that volume out, and be putting those first units in test chambers, driving them on more roads than just the Bay Area for road testing, and having some in all 4 climate zones for world wide testing in Monsoon, Desert, Snow, Ice, Wind, High Altitude, Coastal and Inland testing, beginning before and during the April – May – June time frames. During that time they will be further testing of the production processes on the line, doing burst batches of some cars at various faster rates, then analysing build performance at such higher… Read more »

I think that Tesla will be feeling the pressure to deliver these cars on time and that pressure will be much different than what it felt with Model S and X. A lot of the people on that list are not going to wait forever, especially with the competition hot on their heels, and even beating them to the dealerships.

I waiting in line and was one of the first people to order the car and even I won’t wait to long into 2018 for my car. If there’s some very attractive 200+ mi EVs out there by then, I may be tempted, furthermore, if it looks like the tax credits are expiring, I will be financially tempted to jump.

In that case you will be a guinea pig for a prototype model. There is not way for Tesla to build and test the car fully by the end of 2017. They can build some early production models, these will have a lot of problems and need to be tested extensively before models with acceptable build quality can be produced in large numbers. People claim Model 3 will be simpler than Model X. That is not the case. Model 3 is on a new platform, unlike Model X that was using the reliable Model S platform. Everything on Model 3 is new, the battery, drivetrain, chassis etc. And it will have new software, electrical system etc. It is a more challenging launch than Model X which basically was a Model S with new doors.

I think Tesla can make a few Model 3s in late 2017. These will be early build models though. They need to be tested for about a year before mass manufacturing can begin. So I agree with late 2018 for mass production, but they will show something in 2017.

They already made a few M3’s in early 2016. Based on your math, they are dead on schedule.

Don’t believe most of what wall Street analysts say they are in the business to enrich themselves not to enrich the average 401k contributor. Don’t forget the great recession.

Wouldn’t Tesla have more to show for at this point if they were ready to mass product in 2018? Where are the test mules that they should be testing in all sorts of crazy places? This is an entirely different ball game for them, not just another derivation of their Model S/X platform. We are talking about an eventual order of magnitude higher production numbers.

Adam Jonas is a smart fellow who knows that Tesla will achieve volume production of Model 3 in 2017. His statement to the contrary, without explanation, is an intentional act to manipulate market expectations for Tesla.

OMG! like camping for an iPhone!

First remember what Musk said at the May 4 conference call this year: “I would say we would aim to produce 100,000 to 200,000 Model 3s in the second half of next year. That’s my expectation right now. Yeah, so that’s the thing.” Then recall what JB Straubel said in October of 2015 (U. of NV Reno): “For the Model 3, we’re inventing a whole new platform: it’s a new battery architecture, it’s a new motor technology — brand new vehicle structure…so it’s a lot of work…it is a brand new vehicle — and it has to be; ” minutes later stating: “[Model X] is a sport utility vehicle that we’ve built on the same platform as Model S, so we were able to do it relatively quickly….” Of course, what Straubel said should scare the snot out of a rez holder if Model X (which in fact was different from only in sheet metal and door configuration) is considered “relatively quickly”. Obviously Musk has lost his self-control with this 2017 commitment. If you want to know what Model 3 progress will look like, the Model X history is past as prelude: FY’13 Shareholder letter “We expect to have production… Read more »

So, ~3 quarters behind if they keep to Model X, assuming they’re able to do a different platform relatively quickly.

pj: In the sense that any plan to undertake mass producton of any automobile requires production-intent vehicles (not “Alpha” or “Beta”) one year before the actual line opens, they are at least 2 quarters behind. Against Musk’s proclamation to “produce 100,000 to 200,000 Model 3 in the second half of” 2017, I think they are more like 4-5 quarters behind because of the enormous capitalization task before them. This is basically the Jonas view. Please note that the other key aspect of the Jonas report was this: “Given [SolarCity’s] financial condition and recent reduction in guidance, we have assumed zero value for [SolarCity] equity to [Tesla] shareholders”. Remember that the underwriters of the Asset-Backed Loan have modified the ABL agreement such that Tesla cannot use the ABL to provide cash to the SolarCity business entity. What that means in the bigger picture is that Tesla will have to go to capital markets for a raise very soon. I don’t mean to say that’s a disaster. But with the exceptional investment needs for the M3 over a very short time (Wheeler greatly decelerated CapEx in Q2/Q3), share values will drive a huge issuance, which in turn will pressure more conversions of… Read more »

Yawn. Thank you Master of the Obvious. The X was late. Search the archives and you will see stories right here on this site saying exactly why. Only news, regurgitated in detail.

“Search the archives and you will see stories right here on this site saying exactly why.”

Oh, I know exactly why, Nix. Everyone does. What many forget is how long and tortuous was the path to Tesla oozing out the truth over several quarters. And what may can’t see is exactly the same behavior now.

One of the recurring Investor Relations themes was how the Model X development was “accelerating”. This was stated in several communications over the course of about a year. And yet it was actually falling behind.

Tesla isn’t the first to employ the drip-drip information trickle. Boeing did the same thing in their presentations about the 7E7 / 787. But it’s just useful for any stakeholder (investor or reservation holder) to understand the technique when it’s right before your eyes.

Tesla is falling behind on the M3 but they aren’t saying it yet in truthful terms. Stand by.