Tesla Motors Inc. (NASDAQ: TSLA) Sales Forecast Slashed As Production Concerns Mount

Posted by George Brook December 18, 2014 0 Comment 915 views


Tesla Motors Inc. (NASDAQ:TSLA) problems refuse to go away having already caught the attention of some of the analysts who have stuck with it all along. Morgan Stanley (NYSE:MS) analyst, Adam Jonas, who is a staunch supporter of Tesla, believes it is highly unlikely that the giant electric company will be able to deliver on the 500,000 car delivery estimates by 2020.

Concerns over Oil Prices

Tesla Motors Inc. (NASDAQ: TSLA)’s cars continue to command the high-end appeal something that is poised to work against the company, in enjoying the benefit of selling to mass-market. The fact that the cars are priced at the $105,000 mark should be a big deterrence in the company attracting mass sales from people who are used to buying cars for an average of $35,000. The ongoing decline in oil prices continues to raise further concerns on the automaker’s ability to sell vehicles at the current margins.

A decline in oil prices has already seen a number of people opt to buy fuel guzzlers at the expense of electric cars as they have turned out to be efficient and cost effective. At the current price range, Jonas maintains that Tesla Motors Inc. (NASDAQ:TSLA) will only be able to sell a total of 300,000 cars y 2020 as competition is also expected to play a big role going forward.

Competition Threat

Emergence of new competition in the electric car space, as well as a decline in oil price, has gone a long way in suppressing Tesla’s stock price surge, in the market.  Daimler AG (OTCMKTS:DDAIF) is one of the automakers that is thought to be planning to roll out 10 new plug-in vehicles by 2020. Tesla Motors Inc. (NASDAQ: TSLA) high market valuation in the recent months was based on the fact that the automaker operated as a monopoly sentiments have since changed with the entry of more players in the space.

Daimler is already pushing for a stronger footprint in Asian markets, plans that have been accelerated by the fact that its cars are cost effective compared to Tesla’s. With the likes of General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) also unveiling plans for the electric space Tesla’s dominance of the space could be in severe danger going forward.

Production Concerns

CEO, Elon Musk, has already admitted that recently initiated improvements on Model-S could severely affect the company’s production speed in the short term. As a result, the electric car company looks unlikely to deliver 35,000 Model S vehicles this year with the same expected to fall short of 2,000 units. Musk has also stated that the automaker is not facing any demand issues but struggling a bit in attaining the desired production levels.

Tesla Motors Inc. (NASDAQ:TSLA) according to the CEO has more demand than it can meet at the moment without advertising. It needs to be seen if the same trend will continue with the entry of more players in the space.



About George Brook

George Brook covers money and politics for GDP Insider. George is a veteran journalist who has also covered Congress, national political conventions and presidential politics. George also covers the White House as well as economic and domestic policy for GDP insider. George's reporting has won numerous awards, including two Scripps Howard awards, two National Headliners, two Gerald Loeb Awards, as well as honors from Sigma Delta Chi and the National Press Club.

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