Tesla bears mutter over lack of details on Gigafactory, Model 3, and battery costs

Published By: Angela Campbell on January 6, 2017 08:09 am EST

On Wednesday, Tesla Motors Inc (NASDAQ:TSLA) hosted an event at its lithium-ion battery plant, the Gigafactory, where battery cell production is up and running. While the guests were impressed with the state-of-art design and equipments and the level of automation at the factory, Tesla’s management did not gave them enough details to show its significance.

The Gigafactory must be the company’s most impressive and essential creation that is expected to reduce costs of batteries, which go into the heart of its products and contribute a major portion of their costs. Economies of scales and improved operational efficiency at the Gigafactory will make the tag price of the Model 3, its upcoming all-electric compact sedan, a reality.

Following the event, a bunch of research notes appeared in which most of the analysts, particularly Tesla bears, expressed the grievances. Goldman Sachs’ David Tamberrino felt the lack of quantitative updates related to production ramp and for 2017, particularly costs reduction estimate.

Goldman Sachs’ Adam Jonas, conversely, pointed towards the need of more capital funding to support Tesla’s ambitious long-term plans. He wanted more details on the Model 3 and by when the Gigafactory production would be beneficial for the vehicle.

Interestingly, Pacific Crest’s Brad Erickson felt the factory tour left “much to the imagination” and he thought that investors were disappointed with missing details on how the Gigafactory would help in reducing the costs.

Barclays’ Brian Johnson went ahead and predicted Tesla CEO Elon Musk’s tweets during 2017, pointing towards Model 3 delay, another capital raise, slowing down SolarCity’s growth, and use of job creation to get government funding rather than EV subsidies. Shockingly, he expects Tesla to deliver just 75,000 cars in 2017, compared to 76,230 delivered in 2016 and the management’s guidance of 500,000 for 2018.

UBS’ Colin Langan believes that “the event didn’t address concerns” and he remains skeptical over production targets, cash burn, energy storage production, and Model 3’s initial profitability.

While coming down to the conclusion, it is important to note that none of these analysts have a Buy rating on Tesla. We have not come across any Tesla bull who was displeased with the investor event. Moreover, Tesla bears have frequently whined in the past over lack of details about Tesla’s products or initiatives. But then, why would the management reveal all of its cards at once?

After tumbling throughout the trading session on Thursday, Tesla shares recovered to close the market down 0.11% at $226.75.