Tesla Permabull Adam Jonas Cuts Tesla Price Target By 26%

• Tesla Motors Inc TSLA shares have lost 20 percent since January 4.
• Morgan Stanley’s Adam Jonas maintained an Overweight rating for the company, while reducing the price target from $450 to $333.
• The price target reduction reflects lower volume expectations for Model X and Model 3, a lower valuation for Tesla Energy, and stiffening competition in the mobility business, Jonas stated.

The launch of Model X has been delayed by at least one year due to manufacturing and engineering challenges. This could add “hundreds of millions of dollars” to costs while also resulting in the loss of some customers, analyst Adam Jonas mentioned.

“It is reasonable to assume that Tesla's technical resources have been diverted from other projects to ensure proper execution on X.,” Jonas wrote. He added that this assumption, coupled with the need have the most efficient manufacturing design for the lowest priced car, points towards a Model 3 launch in late 2018, which is at least a year later than what Tesla has been targeting.

Referring to a reduced valuation for Tesla Energy, the analyst said, “The true cost of owning an energy storage unit appears even higher than we previously thought.” He further commented that this the economics do not support “much of the gigafactory output being diverted to the power sector any time soon.”
Moreover, the valuation of Tesla Energy now reflects a “greater degree of risk from low energy prices.”

There has been a significantly higher level of interest in the shared mobility space by a wide range of competing players, Jonas pointed out. He expects the “competing efforts” from that companies like Ford Motor Company F, Volkswagen, LG Corp and Alphabet Inc GOOGL to be genuine and there could be “further significant follow-through with investment and collection of human capital.”