Tesla was set to open over 6 percent below the previous close on Thursday after it alarmed investors with its biggest quarterly loss yet and a hold-up in production targets for its Model 3 car by about 3 months.
After a year which has actually seen shares in Silicon Valley’s company CEO Elon Musk’s venture increase 50 percent on faith in its placing as a significant future automaker and producer, experts expressed doubt over Musk’s interaction with markets and one – Nomura’s Romit Shah – stated the company could require more funding.
“Tesla needs to slow down and more narrowly focus its vision and come up for a breath of fresh air,” Cowen and Co analysts stated in a note. “Elon Musk needs to stop over promising and under delivering.”
Tesla stated bottlenecks in the ramp up of production of the more cost effective Model 3 sedan, commonly viewed as crucial to the company’s future success, came from its battery module assembly line at its Nevada Gigafactory, where Tesla needed to upgrade part of the production process.
It now expects to construct 5,000 Model 3s weekly by the end of the first quarter of 2018 from its original target date of December.
Some experts were motivated by the detail Tesla provided about the battery and production problems and expressed confidence in its capability to fix the problems.
However they were more divided on the company’s promise that it was now on top of the Model 3 concerns and well-capitalized for the additional investment needed to fix them.
“While we expect that increased Model 3 production will provide a meaningful injection of liquidity on a number of fronts, Tesla runs the risk of requiring funding over the next few quarters, particularly if Model 3 production continues to undershoot expectations,” Nomura Instinet expert Romit Shah said in a note on the results.
He included that the market would continue to support the automaker’s capital requirements.