Tesla Inc. is expected to report its fourth-quarter sales this week amid expectations that hiccups with the Model 3 could still hamper the Silicon Valley car maker’s numbers.
“Continued challenges” with the mass-market sedan are likely to overshadow “healthy” sales for Tesla’s Model S and Model X pricier vehicles, analysts at Cowen said in a note Tuesday. They are expecting Tesla to report deliveries of 2,250 Model 3s.
Analysts surveyed by FactSet expect Tesla
to report deliveries of 30,000 vehicles in the fourth quarter, of which 4,100 would be Model 3 sedans.
The exact delivery number ”isn’t that relevant to the long-term investor’s view of Tesla shares,” and the run rate production levels will be more telling, the Cowen analysts said. Many of the “kinks are starting to get worked out of the (Model 3) production process,” they said.
The analysts kept the equivalent of a sell rating on the stock, pointing to the company’s cash burn and growing competition from other auto makers’ electric cars.
Analysts at Evercore ISI said in a note Tuesday they expect 31,500 deliveries for Tesla, including 5,800 Model 3s.
“Deciphering Model 3 deliveries to date is no easy task, however, we see downside risk to consensus numbers with Model 3 deliveries more likely in the 3 to 4k range than north of 5k units,” they said.
Even more important will be any commentary provided on Model 3 production run-rates, they said.
Tesla disclosed the deliveries of 26,150 vehicles in the third quarter, including 220 Model 3 sedans, slightly beating expectations of slightly less than 26,000. Tesla reported 22,000 vehicles delivered in the fourth quarter of 2016, which was below expectations around 25,000 vehicles.
Tesla promised shareholders it would ramp up Model 3 production to 5,000 sedans a week in 2017 and then on to 10,000 a week in 2018, but production bottlenecks disclosed in October led the company to push back its 2017 goal to late in the first quarter of 2018, putting pressure on the company’s cash position.
Analysts at KeyBanc last week cut their expectations for Model 3 sales, to about 5,000 from 15,000, saying they revised their estimate based on conversations with Tesla salespeople at 18 Tesla stores across the U.S.
In November, analysts at Morgan Stanley also drastically cut their Model 3 sales expectations for the fourth quarter to about 1,000 sedans, down from a previous estimate of 10,000 cars.
Tesla shares have gained 50% in the past 12 months, compared with gains of 20% for the S&P 500 index.