Tesla Inc (Nasdaq: TSLA) investors get an important update on the Model 3 this week, and analysts are expecting the electric car company to once again miss the mark. Loup Ventures analyst Gene Munster says Tesla investors should be prepared for more bad Model 3 news throughout 2018, but they shouldn’t give up on Tesla just yet.
Munster is expecting Tesla to report fourth-quarter Model 3 deliveries of just 2,500, less than half of the consensus Wall Street analyst estimate of 5,200. To make matters worse, Munster says Tesla will likely miss its first 2018 Model 3 production target as well. After previously targeting Model 3 production of 5,000 vehicles per week by the end of 2017, Tesla bumped that target back to “late Q1 2018” following its third-quarter earnings report. Munster says even the new target is “ambitious.”
[See: 7 of the Best Stocks to Buy for 2018.]
But even if Tesla stock takes a hit on more Model 3 production delays, Munster says investors can rest assured Tesla’s technology remains ahead of schedule.
“While other car manufacturers build gas-powered vehicles at scale, building autonomous EVs is a vastly different process that will require traditional auto manufactures to re-engineer their production facilities,” Munster says. He says Tesla is simply experiencing the same type of production difficulties that every other automaker will experience when transitioning to large-scale electric and autonomous vehicle production.
In October, Tesla reported that it produced 220 Model 3 vehicles in the third quarter. CEO Elon Musk had previously said the company would produce more than 1,600 Model 3s by September.
Munster isn’t the only analyst to doubt Tesla’s fourth-quarter Model 3 production. KeyBanc analyst Brad Erickson reduced his fourth-quarter Model 3 production target by two-thirds, cutting it from 15,000 to only 5,000.
Like Munster, Erickson says investors shouldn’t get too hung up on a single number.
“We think bullish investors in particular remain more focused on that the car is being produced with minimal defects and that consumer reviews and response are favorable,” Erickson says.
According to Munster, Tesla investors may need to wait several more quarters for the Model 3 story to play out. “We predict a breakout year for the Model 3 in 2019 which means, until then, other elements like solid Model S and X production numbers, increasing energy deployments like the South Australia installation, and future vehicles (Roadster, Semi, Model Y, and pickup truck) will stoke investor optimism,” he says.
[See: 7 of the Best Blue-Chip Stocks to Buy for 2018.]
KeyBanc has a “sector weight” rating for TSLA stock.
More from U.S. News
The 10 Most Valuable Auto Companies in the World
The Top 10 Investment Portfolio for Millennials
Artificial Intelligence Stocks: 10 Companies Betting on AI
More Bad News Expected for Tesla Inc (TSLA) originally appeared on usnews.com
