Goldman Sachs Expects Tesla to Miss Model 3 Targets Again

March 19, 2018, 4:04 PM UTC

Tesla’s financial health hinges on its ability to produce and deliver large numbers of its mass-market Model 3 electric vehicle—a mission that it’s so far failed to complete thanks to bottlenecks in production. Goldman Sachs analysts apparently don’t see a change in course and in a research note released Monday, repeated its sell rating on Tesla stock, sending shares down 1.8% in pre-market trading.

Tesla shares fell even further to 2% after the market open before recovering slightly. Tesla shares were down 1.8% to $315.66 at 11:56 a.m. ET.

Goldman Sachs analyst David Tamberrino predicted that Tesla’s first quarter deliveries of its Model S and Model X vehicles will be below the company’s guidance of 100,000 units or “an implied 25,000 per quarter.” Goldman Sachs also forecast that while there have been improvements in Model 3 deliveries, the firm expects they will fall “well short of consensus expectations.”

Tamberino reiterated his $205 six-month price target for Tesla shares. Tesla shares have not traded in $205 territory since December 2016.

Goldman Sachs expects production and deliveries of the Model 3 will continue to ramp up, albeit more slowly than Tesla CEO Elon Musk has previously promised.

This isn’t the first time Goldman Sachs has taken a skeptical view of Tesla and its assurances. Tamberrino wrote back in November that short-term gains from the newly unveiled Tesla Semi would be dragged down by the bigger and more longer term issues surrounding the Model 3.

Tesla has struggled to meet its own production and delivery goals for the Model 3. Tesla reported in January that it produced 2,425 Model 3 cars in the fourth quarter and delivered 1,550, missing Wall Street expectations. Tesla pushed back its target of producing 5,000 Model 3 sedans per week to the end of the second quarter.

Tesla’s production problems were revealed in early October when the automaker reported it had produced just 260 of its new Model 3 electric cars in the third quarter, of which it delivered 220.