Tesla CEO Elon Musk was dealt a heavy blow by a report from Goldman Sachs, with the major investment firm stating that it does not believe his company will be able to meet its Model 3 production goals.
“We believe the sustainable production rate for the second quarter of 2018 is most likely below the 2,000 vehicle mark the company achieved in the final week of the [first] quarter,” wrote Goldman analyst David Tamberrino in an analysis published Tuesday. “We see the company likely sustaining Model 3 production around the 1,400 per week mark.”
Tamberrino went on to say that, despite Tesla’s assurances to the contrary, the Silicon Valley automaker will more than likely have to resort to raising additional capital.
“Although the company stated that is does not require a capital raise this year, we note that this is predicated upon a sustained 5,000 per week production rate achieved exiting the second quarter of 2018,” he explained. “Beyond a required capital raise to continue to fund the launch of the Model 3 program, the company would likely still need outside capital in the future for capacity and product expansion.”
Goldman Sachs encouraged investors to sell their Tesla stock, arguing that the value will likely drop.
The report came as bad news for Musk, who has worked tirelessly to boost production of his electrical vehicles and move on from what was a brutal last month that saw a credit rating drop from Moody’s and a recall of the Tesla S. In their first quarter report released on April 3, the automaker revealed their Tesla 3 models were the best electric car sellers in the country. The report also predicted its Model 3 production would increase to 5,000 a week by June — a prediction Goldman Sachs isn’t buying.
Musk is giving the report push-back. The beleaguered CEO took to Twitter and appeared to challenge would-be sellers, writing “place your bets.”
Place your bets …
— Elon Musk (@elonmusk) April 10, 2018
Success of the company hinges greatly on its Model 3 production as sales for its older models drop. The company’s share price dropped two percent this year amid continual missed production targets.
Follow Jason on Twitter.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact [email protected].