Goldman maintains bearish stance on Tesla: Here’s why

By FOX BUSINESSFOXBusiness

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Are Tesla’s Model 3 production issues coming to an end? According to Goldman Sachs, the answer is a firm no.

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The tech company and manufacturer of high-priced luxury cars has faced numerous challenges when it comes to the roll-out of its mass-market Model 3. According to Goldman, the production challenges for the Model 3 are far from over. Even worse, Tesla is lagging behind on production of its other vehicles including the Model S and the Model X.

Goldman maintained its Sell rating on the company and expects a further setback when Tesla announces its first-quarter 2018 deliveries.

The investment bank anticipates Tesla will release its first-quarter 2018 deliveries shortly after the quarter ends given historical precedent. Based on the February cadence, Goldman believes that the company is tracking below its 2018 Model S/X guidance of about 100,000 units and noted that while Model 3 deliveries are showing improvement, the bank expects they will fall well short of expectations.

“Altogether, we continue to expect a slow ramp for the Model 3, and maintain our Sell rating as we expect shares to de-rate as targets are potentially pushed further out,” the bank’s analysts wrote.

Goldman added that there are “mixed reviews on the Model 3” regarding build and user interface.

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“We believe that initial reviews on the Model 3 are important to gauge the production ramp, and can act as an indicator of consumer demand/potential reservation conversions,” the analysts wrote.