Tesla Analysts Warn of Slumping Sales

Another Wall Street firm is cautioning that first-quarter sales by Tesla Inc. may slip because of cooling demand for its Model 3 electric sedan, Bloomberg News notes.

Financial services provider RBC Capital Markets predicts the carmaker’s deliveries of Model 3s in January-March will total fewer than 53,000 units, down from its previous estimate of 57,000.

Last Friday investment bank Cowen Inc. lowered its first-quarter sales forecast for the $35,000 Model 14% to 55,000 cars. The firm also trimmed its estimate of demand for Tesla’s pricier Model S sedan ($146,500) and Model X crossover ($153,500) by 16% to 18,000 units. Cowen suggests Tesla’s prices must drop to offset the shrinking tax deduction offered by a federal incentive program.

Similarly, investment bank JMP Securities LLC trimmed its forecast today, citing continued weakness in the overall market and for Tesla’s cars.

But Bloomberg says the dip in Model 3 sales this year may simply reflect the logistical challenge of introducing the car in Europe and China. Tesla, which has no independent dealer network, doesn’t record a sale until the vehicle is delivered to its owner.

Analysts are watching demand for the Model 3 very closely, because they consider its sales performance a key measure of the company’s ability to produce a sustainable profit. Tesla, which has no independent dealer network, reports a sale only after a vehicle is delivered to its owner.