Cowen: Tesla's Q1 Deliveries Will Fall Shy Of Buy-Side Expectations

Tesla Inc TSLA will report deliveries of 23,000 vehicles in the first quarter of 2017, according to Cowen analyst Jeffrey Osborne’s projections.

Investor eyes are likely turned toward the future, namely Tesla’s preparations for the expected July launch of the Model 3 sedan, Osborne said.

“While we expect some softness in [first quarter] deliveries, potentially by 1,000-1,500 units versus buy-side expectations, we don’t believe this will cause a stir with investors long the stock given the impending ramp of the Model 3.”

Cowen maintained an Underperform on Tesla with a $155 price target. Tesla has historically reported first quarter earnings in May.

Longer-Range Battery Reaches Market

Buy-side expectations may not fully account for the delay seen in the EPA’s approval of a range-extending 100 kWh battery option for the Model S sedan and Model X crossover, according to Cowen.

The battery gives the Model S a range of about 335 miles and, for the Model X 100D, about 295 miles, the firm said.

“Our understanding is that inventory built up at dealer lots for several weeks until the EPA approved the window sticker for the 100 kWh in mid-March,” Osborne said in Wednesday’s note.

Model 3 Battery Production To Begin ‘Over The Next Month Or Two’

A presentation last week by Kurt Kelty, senior director for cell supply chain and business development at Tesla, gives some insight into the production timeline for the Model 3, Osborne said.

Tesla hasn't yet started battery production for the Model 3, according to Kelty’s presentation to the International Battery Seminar, Osborne said, but will begin to manufacture them “over the next month or two.”

The company appears to have acknowledged during its $1.15 billion capital call that stamping equipment for the Model 3 is now in place at Tesla’s Fremont, California facility, Osborne said.

The Tesla Risk: Delays

While Tesla is led “by a true visionary,” the company’s risk/reward profile is lopsided at its present valuation, Osborne said, adding that potential for delay exists with the Model 3 launch, the production ramp at the Gigafactory battery facility and integration of the recently acquired SolarCity.

“Simply, we see a lot more that can go wrong than can go right as the company transitions into Mr. Musk’s greater vision as laid out in his Master Plan, Part Deux.”