Goldman maintains bearish stance on Tesla: Here’s why

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

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.

“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.