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Deutsche Bank: Tesla's 'Key Challenge' Continues To Be Execution

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As of the night of April 2, Tesla Motors Inc (NASDAQ: TSLA) had received orders for the Model 3 of over 276,000.

Deutsche Bank’s Rod Lache maintained a Hold rating on the company, with a price target of $280.

Model 3 Demand

Lache believes that it would not be surprising if the company’s backlog neared 500,000 as Model 3 enters production.

“We viewed the market’s reaction to this product as a seminal event. The message to Auto Investors, and to the broader Auto Industry is that EVs, when executed well, can become mainstream high volume products,” the analyst mentioned.

Implications For The Industry

With the Model 3, Lache believes that investments in vehicle electrification, automation and connectivity would receive another boost, although investors might still question whether traditional OEs could prove competitive in this landscape.

Lache also believes that non-traditional players, such as Tesla Motors, “will be emboldened, and possibly ramp their expansion plans.”

The analyst also expects suppliers associated with electrification, connectivity and automation to see meaningful opportunities.

Challenges For Tesla

On the other hand, Lache said one of the key challenges for the company would be execution.

Tesla Motors reported its 1Q deliveries short of the guidance, attributing the shortfall to Model X, while noting that 2Q and the full year delivered were on track.

More importantly, Lache noted that “Tesla is taking steps to ensure that these technical and supplier challenges will not re-occur in the launch of Model 3.”

Latest Ratings for TSLA

Oct 2017Evercore ISI GroupDowngradesOutperformIn-Line
Oct 2017Morgan StanleyMaintainsEqual-WeightEqual-Weight
Oct 2017Standpoint ResearchDowngradesHoldSell

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Posted-In: Deutsche Bank Rod LacheAnalyst Color News Reiteration Analyst Ratings


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