Analysts from Goldman Sachs forecast that electric car manufacture Tesla Inc. will miss its scheduled delivery for its new Model 3 line, causing the firm to downgrade Tesla’s stock to a sell. In response, Tesla’s share price fell 5.6 percent to $244.23. The company’s Model 3 sedan, a cheaper version of its current Model S, is part of its campaign to expand its market reach.
Criticism centered on Tesla’s financial health, concern over its unproven solar business, and its ability to deliver on its promise to deliver the Model 3 this year. David Tamberrino, an analyst at Goldman Sachs, noted that Tesla is spending money too quickly and will need to raise more capital to fulfill its cash needs. More concerning for those hoping to receive their preordered Model 3s by July, Tamberrino expects Tesla to delay its launch on the grounds that its “operational execution is still unproven.” The carmaker has struggled to meet its production targets in the past. In 2016, Tesla produced almost 4,000 vehicles fewer than its 80,000 vehicle forecast. The more models the company makes, the more complex its manufacturing process will be, which may increase the likelihood of delays.
Concerns over Tesla’s operations come at a time of increased competition in the market for electric vehicles. Conventional incumbents such as General Motors and Nissan are already able to produce more affordable electric sedans, with Chevrolet introducing the affordable (and crucially, already on the market) Bolt. BMW appears keen to challenge Tesla for the luxury market with its i8, and murmurs of Audi or Porsche getting involved in the luxury EV market have been circulating for years. With the widening number of options available to consumers, Tesla must recognize that it is not the only major player anymore and ensure that it can remain competitive.
Photo credit: https://www.tesla.com/presskit. Owner/uploader: Alexis Georgeson