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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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Goldman Warns Competition Could Deepen Tesla’s Problems

Musk Tesla

Goldman Sachs has warned that intensifying competition on the EV market plus Tesla’s high debt load would make life for the company more difficult in the future, CNN reports, citing an update from the investment bank on Tesla, in which Goldman reiterated its “sell” rating on the company’s stock and set a US$210 price target. Yesterday, Tesla closed at US$288.95.

In a note to clients, the bank’s analysts wrote that they remained pessimistic about Tesla’s ability to ramp up production and turn in positive cash flow—something CEO Elon Musk promised will happen by the end of this year.

"We see the medium-to-longer term industry backdrop as challenging for Tesla's products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors — at a time when the company's product cadence hits a gap," Goldman analyst David Tamberrino wrote in the note to clients as quoted by CNBC. "We believe the company will see pressure to its lead in EVs as competition catches up."

Tesla has indeed had trouble meeting its own production ramp-up deadlines, which explains analysts’ skepticism regarding future production. Yet the latest reports from the Tesla camp suggest things might be looking up. Earlier this week, sources from the company told Electrek that Tesla had failed to ramp up its Model 3 weekly production to its own set target of 6,000 for August. However, the company’s overall Model 3 target for the quarter – 50,000 to 55,000 cars – is still within reach, with 34,700 Model 3s produced since the start of the third quarter.

At the release of the company’s second-quarter results, which featured higher revenues but another net loss, Musk said he expected Tesla to turn in a profit in both the current quarter and the next, adding that he saw no need to raise more funds, rejecting analyst forecasts that the carmaker needs an urgent cash injection to stay afloat.

By Irina Slav for Oilprice.com

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  • Tom on September 05 2018 said:
    I view the auto market as huge compared to Tesla’s production rates. So, do more electric vehicle options really mean less market for Tesla? I’m not so sure of that.

    Electric vehicles are still a novelty. With more producers and more vehicles to choose from, the novelty will turn into reality sooner rather than later. More electric vehicles will also drive battery technology and an expanded charging network.

    The electric vehicles will not be using the harmful BTEX Octane Compounds Oil Companies put in Gasoline. Reducing the harmful BTEX Compounds and the exhaust particulates they generate will greatly improve air quality for everyone. Something I guess the EPA has Forgotten was part of their job to do.

    So, bring on the electrics, the Oil Industry, the API and the EPA are not interested in cleaner air, if they had been, they would NOT have been fighting ethanol for the last 20 years. You see, high octane clean burning ethanol replaces the harmful BTEX Compounds used in gasoline and greatly reduces vehicle exhaust pollution. But oil companies fight it, they love their BTEX $$$ Compounds!

    So, Bring On The Electrics, every one of them is a Blessing, reducing toxins in the air we breathe!

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