Goldman Sachs Believes Demand For Tesla Vehicles Has Peaked

Demand for Tesla’s Model S and SUV equivalent has peaked, according to analysts at Goldman Sachs, even as the automaker contends demand for its vehicles is outstripping supply.

Tesla said the company delivered 22,000 vehicles in the second quarter, fewer than many analysts expected. Deliveries slowed from a record of 25,000 cars in the first quarter, partially because of a lack of battery packs. Batteries for electric vehicles are composed of rare materials that are not easily mined.

“We believe the excess production above deliveries … point to a plateauing of demand for its current products,” David Tamberrino, a Goldman Sachs analysts, wrote in a note released Wednesday. He was referring to production on Tesla’s Model S and Model X.

Goldman Sachs lowered its six-month target price on Tesla to $180 from $190, indicating a nearly 50 percent decline from Monday’s closing price of $352.62. Tesla shares were down by about 1.5% in premarket trading on Wednesday.

Tamberrino’s position comes as Tesla begins producing the Model 3. The vehicle “passed all regulatory requirements for production two weeks ahead of schedule,” Musk told his Twitter followers. He added that the first model will be completed Friday, bringing an end to several months of buildup.

Musk also tweeted that production on the highly touted vehicle will expand from 100 cars in August to 1,500 in September, and plateau to 20,000 per month in December. He announced a “handover party” will be held July 28 for the first 30 buyers of the Model 3, most of whom have made $1,000 deposits on the company’s first non-luxury vehicle.

Tesla raised its market capitalization to $51 billion in April, a number that is valued at about $1.7 billion more than GM. The two companies have wrestled for supremacy. Musk’s chronic inability to deliver products on deadline and his willingness to get distracted has some analysts spooked.

Read more at Daily Caller

Comments (8)

  • Avatar

    Sonnyhill

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    I wouldn’t want to be the last shareholder to leave the party.

    • Avatar

      ElderHipster

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      I agree. This stock is way overblown. Now we see that Volvo is going to get in the game. A high end proven automaker should have Tesla nervous.

      • Avatar

        JayPee

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        Volvo ” getting into the market ”
        with obvious total commitment
        probably means
        The END of Tesla

        THE END OF VOLVO !

        • Avatar

          John

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          I drive a Volvo for years now. If they are serious about this, it will be my last one.

  • Avatar

    Bill Jackson

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    It is hard to assess this. There are many areas that still have space for premium cars – like high end Mercedes, Teslas, BMWs etc, but some areas are indeed getting filled with what they can bear – what with the used ecology of all cars being impacted by the fact that a Tesla is not a rust bucket IC car – with it’s inherent short life – a Tesla is a 10-20 year car and even 30 years as the design get optimized for longevity year after year.
    The Tesla ecology will flesh out with the Model 3 – which will have enough options to fill the upwards gap to the Models S and X.
    Even as the Model 3 ramps up, sales of IC cars has already started to ramp down – hence the glut of rust-buckets-in-training now on the used car market.
    So Has Goldman Sachs not seen this? Or do they try tp save the shorts?

    • Avatar

      Sonnyhill

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      The auto market is cyclical. When times are good, customers don’t hang on to their conventional “IC rust buckets” as long. Eventually the increased supply of shiny late model cars depresses the value of new cars. The ramp down eventually turns around. The DeLorean was built of immortal stainless steel. Where are they now?
      As for Volvo, they are not abandoning fossil-fueled cars. They plan to offer hybrids and battery only cars. This reflects their customer base. A very old joke goes “Volvo’s are for people who hate cars” . Volvo also once advertised their cars as the safest available (for its passengers). Lots of accident prone drivers bought them.

    • Avatar

      Old44

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      People who buy Tesla’s are the type of people who want to be seen, and they don’t want to be seen in a 4 yo car.

  • Avatar

    Rhee

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    Let’s see how long Tesla can last by eliminating all EV-car “rebates” and tax-credits from both Fed and State governments. Simultaneously get rid of carbon-credits (aka Indulgences) market so Tesla can no longer cover the a$$ of fossil fuel companies with it’s aegis of purity. How many people will buy a car that is priced more like the OG Tesla roadster (>$120,000)?

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