Munster Remains 'Upbeat' On Tesla Despite Model 3 Concerns

Tesla Inc TSLA has a clear problem with the manufacturing of the Model 3 sedan, but the company still has the support of many notable Wall Street analysts and experts. 

The Expert

Gene Munster, managing partner at Loup Ventures. 

The Thesis

Tesla is expected to report delivery and production metrics for the December-ending quarter next week, Munster said in a research report.

Tesla will report that it has delivered 2,500 Model 3 vehicles in the quarter, below the Street estimate of 5,200 vehicles, according to Loup Ventures' estimates. Needless to say, Tesla is falling behind on Model 3 production, and the company's most recent guidance for a production rate of 5,000 Model 3 vehicles per week by the end of the first quarter of 2018 is "ambitious," Munster said. 

Nevertheless, Tesla remains ahead of the competition in building the "car of the future," Munster said. Tesla continues to focus on the future of cars — electric and autonomous — at a time when other car manufacturers are still building gas-powered vehicles at scale. Traditional automakers have yet to go through the "production pain" that Tesla is experiencing today, which gives it a leg up over the competition, Munster said. 

Looking forward, estimating Tesla's Model 3 production rates will be "largely a guessing game," and the breakout year for the vehicle may not come until 2019, he said. 

"Nonetheless, we encourage bracing for a production miss and further reassurance that bottlenecks are being addressed," Munster said. 

Price Action

Shares of Tesla are up nearly 50 percent since the start of 2017. The stock was trading down 1.32 percent at $311.10 at the time of publication. 

Related Links:

From KeyBanc, A Pessimistic Prediction For Tesla's Q4 Deliveries

Adam Jonas: Tesla Could See A Major Inflection In Free Cash Flow Next Year

Photo courtesy of Tesla.