Goldman Throws Up On Tesla, Warns Deliveries Will Decline, Miss Guidance

There was a time when Goldman was quite happy to write fawning research reports of Tesla in hopes of getting named lead manager for its next equity or convertible offering (as described two years ago in "How Is This Not Criminal: Goldman Underwrites $2 Billion Tesla Stock Offering Hours After Upgrading Stock To A Buy").

Those days are long gone, however, and this morning we got some more clues why last week Tesla's two top finance executive unexpectedly departed the company. As it turns out, in his grand vision to colonize the solar system, Elon Musk forgot to care about his car company and as a result Goldman now writes that the bank, which has a Sell rating on TSLA stock, expect Tesla to announce its 1Q18 deliveries soon after the quarter ends, likely around April 3, "and per  registration data and estimates we follow, the QTD pace is currently down yoy and sequentially."


As a result, we set our  Model S forecast to 11,000 and Model X forecast to 11,000, for a combined 22k, down from 24k  previously. This would represent a yoy and sequential decrease of 12% and 23%, respectively. We believe this is likely the result of a seasonally softer 1Q, but also as 4Q17 production was negatively impacted by the shift of manufacturing labor to the Model 3 production and as the company sold down its inventory in 2H17. Regarding the Model 3, VIN registration data implies a production rate of approx. 1k/week being achieved at times in 1Q18, but extrapolating to deliveries we see only 7,000 Model 3s reaching customers in the quarter.


Here are the details:


Model S and Model X deliveries tracking down yoy and sequentially

Per our monthly tracking, which takes data from InsideEVs.com, GreenCarReports.com, as well as the individual country registration bureaus in Europe, January deliveries were down 30% yoy, but February deliveries are tracking up 23% (we use an approximation based on the past few months for countries that have not reported; Exhibit 1).

Overall, this drives QTD deliveries to approximately 8,750 vehicles, which is down roughly 100 vehicles yoy and close to 3,350 vehicles behind 4Q17’s first two months (Exhibit 2) – a quarter where the company delivered 28,425 Model S and X.

Using a 1Q quarterly shaping for Tesla deliveries, which is generally weighted more to the third month of the quarter with 1.7x the amount of vehicles delivered in the quarter’s first two months (vs. the overall quarterly average of 1.4x), we see potential for Tesla to achieve 24,000 deliveries, or down 4% yoy (Exhibit 3). Additionally, the company is tracking down 28% from its first two monthly delivery levels in 4Q17, so we also see potential for Tesla to achieve a lower estimate by applying the sequential growth to 4Q17’s total deliveries – which implies approximately 20,000 vehicle deliveries in 1Q18 (Exhibit 4).

We take the average of the two methodologies to inform our quarterly estimate of approximately 22,000 for 1Q18. Overall, we believe this points to Tesla tracking slightly below its 2018 guidance (approx. 100k Model S/X deliveries).



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