Morgan Stanley Predicts Model 3 Launch Late 2018

[JeffK]

Or a hatchback we don't know about.

Elon said a definitive "no" to that one.

Twitter

 

[BluestarE3]

Elon said a definitive "no" to that one.

Oh, I know. Just playing with folks who still wish for a hatchback on the 3.

 

[gregd]

The MS report was kind of odd. It predicts a late model 3 roll out and a slow ramp with zero increase to the value of the company for the dilution of the stock with SC but does't really change the price target per share. He does value the massive data advantage that the autopilot cars produce though. No explanation as to why he thinks it will be late and slow ramp. Almost feels like he was just under promising conservatively now so he can change latter.

As was pointed out earlier in the thread, it's more likely that they're using the late delivery and slow ramp to paint a worst-case scenario upon which to base their recommendations. This is the financial profession we're discussing here, and they're all about worst-case, least-risk, no-way-it-will-be-worse-than-this basis for their analysis. If (when) they miss, it will all be up-side, and nobody's going to complain about that. Call it under promising, if you'd like. If they based things on the most likely outcome, they'd be wrong half the time, and that's not good for (their sort of) business. If they just take Tesla's promises as a basis, they're also not doing their job as impartial analysts. So, this is what we get. Take it for what it is intended to be used for - stock recommendations - not for when you'll be getting your car delivery.

 

[3Victoria]

It seems a very safe analysis. Huge range, so he can claim he wasn't wrong no matter what happens.

 

[EinSV]

History doesn't repeat itself, but it does rhyme (or so they say).

Jonas made a huge splash in March 2011 by calling Tesla "America's Fourth Automaker" and giving it an unheard of (at the time) price target of $70. The stock rose 17.5% in one day to $27.85.

Tesla Soars On Morgan Stanley Upgrade; Sees 200% Upside

Then, in December 2011, 6 months before S deliveries began, Jonas downgraded the stock and slashed the price target from $70 to $44 based on concerns that the Model S ramp would be slower than expected and worries about long-term EV adoption by consumers. Tesla's stock price tanked.

Tesla: Morgan Stanley Turns Bearish On Slower EV Adoption

In September 2012, once Model S production was up and running, he upgraded again based on Tesla beating market expectations on production.

As others have suggested, Jonas may just be playing it very cautious, or he may have some other agenda. In any case, once Tesla starts delivering Model 3s, if not sooner, I expect he will revisit his analysis.

 

[Red Sage]

I reiterate, for the record, my full opposition to any and all calls for well reasoned, understandable, conservative, sensible predictions of incredible delays for the launch of Tesla Model ☰. They all sound like wishful thinking by Tesla Naysayers to me. So there.

 

[Red Sage]

He's a captain right?

Haha they are both named Henry Morgan so why not...

Here's a wiki for Morgan Stanley - Wikipedia
Here's another for laughs: Captain Morgan - Wikipedia

Disclaimer: Making financial predictions regarding Tesla Motors while under the influence of the wrong Henry Morgan can lead to undesirable outcomes.

Heh. It seems that 'Henry Morgan' is a rather popular name. I had an older Cousin by that name, who passed about six years ago. Here's another:

Henry Morgan

 

[Red Sage]

Well, it does have an interior we don't know much (if anything) about.

Meh. Interiors are almost entirely window dressing anyway. They can be removed and replaced without much effort.

 

[JeffK]

Heh. It seems that 'Henry Morgan' is a rather popular name. I had an older Cousin by that name, who passed about six years ago. Here's another:

Henry Morgan

I liked that show... I can't believe they cancelled it!

 

[Red Sage]

I liked that show... I can't believe they cancelled it!

It's my fault. ABC hates me. They cancel everything I watch. Hence, why I have never watched 'CASTLE' and Nathan Fillion finally had a television show that lasted more than one third of a season.

 

[McHoffa]

I wasn't watching the forums from 2012 when they first unveiled the prototype Model X to when they finally unveiled the final product, but how often did they say it was on schedule, and then end up delaying it?

I ask because Musk/Tesla have said more than once that they are still on track, that NEW orders will be mid 2018, that most preorders will get the tax credit, etc. They've said this over and over since April 1. Now here we are in November and Musk told us the third reveal, which we all assume is the interior/final production car (since pencils down happened 5 months ago), suppliers have a July 1 deadline to be at full capacity (which means they will be at partial capacity before then) and they didn't unveil the Model X until a few were ready for delivery.

I will guess they will hold another March 31 event to unveil the final car, with a few highly optioned employee cars ready to deliver. Next they'll start out delivering highly optioned cars to previous owners in California over the next month. Then they will quickly ramp up to full capacity within a few months, pushing toward the goal of 100k-200k by end of 2017, and all preorders delivered by mid 2018.

Sure, it might be wishful thinking, but they keep saying they're on schedule, and we're only about 4-5 months from final reveal now.

 

[3Victoria]

I guess if the manufacture is (almost) all robotic, then after you determine it is working, you just turn up the volume to 11.

 

[SageBrush]

I wasn't watching the forums from 2012 when they first unveiled the prototype Model X to when they finally unveiled the final product, but how often did they say it was on schedule, and then end up delaying it?

I ask because Musk/Tesla have said more than once that they are still on track, that NEW orders will be mid 2018, that most preorders will get the tax credit, etc. They've said this over and over since April 1. Now here we are in November and Musk told us the third reveal, which we all assume is the interior/final production car (since pencils down happened 5 months ago), suppliers have a July 1 deadline to be at full capacity (which means they will be at partial capacity before then) and they didn't unveil the Model X until a few were ready for delivery.

I will guess they will hold another March 31 event to unveil the final car, with a few highly optioned employee cars ready to deliver. Next they'll start out delivering highly optioned cars to previous owners in California over the next month. Then they will quickly ramp up to full capacity within a few months, pushing toward the goal of 100k-200k by end of 2017, and all preorders delivered by mid 2018.

Sure, it might be wishful thinking, but they keep saying they're on schedule, and we're only about 4-5 months from final reveal now.

Tesla is all of a couple years old, is a rapidly changing company, and has a historical record of .... ..... three cars. It is silly to infer future performance from the past. So your points are spot on, discounted by Tesla's reliance on 3rd party suppliers.

I get itchy when I read 'analysts.'

 

[DragonWatch]

I wasn't watching the forums from 2012 when they first unveiled the prototype Model X to when they finally unveiled the final product, but how often did they say it was on schedule, and then end up delaying it?

I ask because Musk/Tesla have said more than once that they are still on track, that NEW orders will be mid 2018, that most preorders will get the tax credit, etc. They've said this over and over since April 1. Now here we are in November and Musk told us the third reveal, which we all assume is the interior/final production car (since pencils down happened 5 months ago), suppliers have a July 1 deadline to be at full capacity (which means they will be at partial capacity before then) and they didn't unveil the Model X until a few were ready for delivery.

I will guess they will hold another March 31 event to unveil the final car, with a few highly optioned employee cars ready to deliver. Next they'll start out delivering highly optioned cars to previous owners in California over the next month. Then they will quickly ramp up to full capacity within a few months, pushing toward the goal of 100k-200k by end of 2017, and all preorders delivered by mid 2018.

Sure, it might be wishful thinking, but they keep saying they're on schedule, and we're only about 4-5 months from final reveal now.

Musk/Tesla was very forthcoming about the delay of the MX, if you recall. The III is built/designed around previous successes with the X & S, but a hair less tech prestigious while keeping the X & S on the bleeding edge. Hence the lower price point, and quicker decision points. However, for a price you can upgrade your III just like any car dealership.

While I have not always been pleased with bad news like delays, care fires, seat belt and the list of issues goes on, but almost without fault Tesla/Musk has stood on the side of truth and not on the side of greed. It is a up or down, left or right, you said or I said thing ~ he has been pretty truthful and that is hard to come by these days or in reality a very long time ~ maybe that is what is so refreshing about Musk.

 

[Ulmo]

Elon knows that Tesla's reputation will take a big hit, as will his personal reputation, if the 3 is anywhere near as late as Adam Jonas has forecast.

More than that:

• He knows they would not be able to grow the model faster if it is more difficult to make
• He knows they would lose market share
  
• He knows they would not convert the world to electric use faster
• He knows they would not be able to rake in the high margins the Model 3 will bring in as soon as anticipated, which would further fail to bring in all of its huge profitability and paying some loans (loan interest rates would be higher)
• Other projects on his table would suffer from the above

So, it's not just reputation. The incentive to not screw around beyond necessary with the Model 3 is really strong. I think he knows that and will do the right thing. He said so as much over, over, and over, and over and over again.

 

[Ulmo]

One way Jonas's prediction could turn out right, for other reasons than he's probably thinking, is that the considerable forces (read: oil & gas industry plus GM and its allies plus auto dealers and their allies plus Repulbican-controlled executive, legislative, and judicial branches of govt) arrayed against Tesla could somehow sabotage the work done by companies down the supply chain that are critical for Model 3 production. Elon himself has said countless times that it would only take a single late supplier to impact the Model 3 schedule. Well what if the evil forces arrayed against Tesla screw with two or three or ten suppliers? I would not put it past them (particularly the Koch henchmen) to pull something like this. A *lot* of people want very much for Tesla's Model 3 rollout to fail.

In theory, yes, but these types of events are easier to recover from than intrinsic design and engineering failures. Enough testing gets done along the way to catch the glaring errors, and the sabotage tends to only be as good as the saboteurs, and they pretty much suck right now. Although some timing issues could conceivably hurt other product lines (S, X, Roadster), Tesla has been strategically investing in having internal backup manufacturing for most of their Model 3 parts, so I think this issue will be resolved before it gets out of the gate.

Tesla has been pretty good about executing this right from every view I've seen so far.

 

[McHoffa]

Musk/Tesla was very forthcoming about the delay of the MX, if you recall. The III is built/designed around previous successes with the X & S, but a hair less tech prestigious while keeping the X & S on the bleeding edge. Hence the lower price point, and quicker decision points. However, for a price you can upgrade your III just like any car dealership.

While I have not always been pleased with bad news like delays, care fires, seat belt and the list of issues goes on, but almost without fault Tesla/Musk has stood on the side of truth and not on the side of greed. It is a up or down, left or right, you said or I said thing ~ he has been pretty truthful and that is hard to come by these days or in reality a very long time ~ maybe that is what is so refreshing about Musk.

Also, we know from the clay sculpture that the Model 3 has been in the works since 2010! It's not like they just decided to make this car in 2015. I would bet 99% of all design, engineering and planning was done when they showed it to us in March, with a full 18 months to get them built on top of that.

 

[Red Sage]

There is [no] way that Tesla is going to give the 3 some cool new driver interface without offering it on the S/X months before the 3 goes into production.

Perhaps. But some might have made similar statements, expecting that the Tesla Roadster would hold an untouchable position within the Tesla Motors product line. But there is no version of the Roadster that does 0-60 MPH in 3.2 seconds, let alone 2.5 seconds. And the move to a horizontal layout for the main display in Model ☰ is a major change to the driver interface as compared to Tesla Generation II cars. I say again, there is no reason to protect sales of Model S and Model X. Those vehicles will dominate their price range, and exceed expectations for sales no matter how popular or advanced Model ☰ becomes. Certain features may only have 'added value' on the high end cars. Those types of 'bells and whistles' may only appear on Model S and Model X. But anything of great significance will likely be available on the entire product line, either as standard equipment or as an option.

Elon knows that Tesla's reputation will take a big hit, as will his personal reputation, if the 3 is anywhere near as late as Adam Jonas has forecast.

I get the impression this set of predictions just allows Adam Jonas to post 'outperform' statements over the next 36 months.

So I believe that Adam will turn out to be very, very, wrong. Of course I could be wrong...

Same here.

 

[DragonWatch]

Military academy elites tried and failed to oust me, a lowly OCS graduate that marginally passed school tests. In the field they could not compete. I bowed out as soon as retirement came up so that my wife could fulfill her life long dream, not under pressure. Who knows how many academy guys did not get promoted. Started with 1200 and walked away standing as one of the last 300. My wife just retired as state lead Landscape Architect for the department of transportation. We both are still standing after 43 years, and in love after both careers. Can Trump say that?

Long story short or bottom line, I am sticking with the little guy Elon/Tesla, against any auto manufacturer. Remember that when I bought my first Toyota (Celica) in 1975, Toyota was the little guy then and everyone figured Toyota had snowballs chance in hell of beating out the likes of GM, Ford and so on, especially on their own turf. Oh yeah, GM and others helped by overtly gutting and defaming their labor unions. Maybe Elon/Tesla isn't as little as the enemy thinks.

Also remember electricity vs fossil fuel have battled twice before in history, and electricity lost out. Regan helped waste taxpayer funds when he personally had ripped off the White House roof the recently installed solar panels. This time the playing field while still stacked against Elon/Tesla the tactical strategy appears solid and uniquely strong. Again, as I have repeatedly stated the team gets out ahead of the wave and balances through it despite the pure hate against Elon/Tesla/Electric cars. I am not saying Elon/Tesla is not walking a tight rope, nope it tighter than ever. Remember GM killed their own electric car years ago, will they do it again.

Frankly I want all manufacturers to succeed with electric cars including other alternatives because this political corruption and the draining our national treasures with fossil fuel subsidies and crushing the future for all has got to end, and not just my Grandpups. Maybe fossil fuels can still be used by you in your dandruff shampoo. No pressure Elon

 

[Alketi]

Supercharger | Tesla

Look at the existing network and then click on the 2016 tab to see what it's supposed to look like in about 37 days. Think they'll make it? Not even close IMO. So where's the infrastructure? So maybe 2017 will be the year of the Supercharger rather than the Model 3. After all, $TSLA will start making $$$$ from SC'ing next year, which will help promote more Superchargers and then, maybe, the cars will come in 2018. Maybe a good time to pony up for that inventory Model S. I'm really loving mine.

There was, what appears to be, a massive pullback in Supercharger and possibly Service Center construction by Tesla last quarter. They also streamlined S/X options, removed the cheapest X, and increased prices in a number of ways.

There are a number of possible explanations for this. But to name two:

1. The Model 3 is delayed and such expenditures aren't needed now (the Bearish argument)
2. The Model 3 is on schedule but Tesla is raising prices and trimming capital spending on nice-to-have items to avoid any further capital raises

Between Superchargers and Service Centers, the lack of Service Centers is more concerning. Superchargers can be added over time, but Service Centers will be swamped with Model 3 deliveries and overrun should there ever be service issues with the new car.

I can't remember the exact figure, but Tesla was predicting somewhere around a billion dollars of CapEx this quarter, after heavily reigning it back last quarter. Where that money goes remains to be seen. The results should be interesting.