Tesla shares tumble as doubters emerge

Tesla stock took a hit Monday as Goldman Sachs downgraded its outlook for the electric vehicle maker.

An analyst at the investment bank dropped the company from neutral to sell, based on uncertainties about Model 3 production, SolarCity’s performance after its acquisition and the company’s likely need to raise more cash.

Tesla shares tumbled about 5 percent in early Monday trading.

Tesla set vehicle production records last year, but again struggled to post a full-year profit. Nevertheless, company stock has climbed about 50 percent in the last three months.

CEO Elon Musk said last week the Fremont factory is slated to ramp up to as many as 4,000 Model 3 vehicles per week by the end of the year. Tesla expects to deliver between 47,000 to 50,000 Model S and Model X vehicles in the first half of the year.

Simpler design is the key to faster manufacturing of the Model 3, Musk said. “A lot of the bells and whistles on a Model S and X are not present on a Model 3,” he said. The lower-cost electric sedan, starting at $35,000 and reaching more than 200 miles on a single charge, is Tesla’s first move into a broader market.

Competition in the market has already arrived. The all-electric electric Chevy Bolt, priced at about $37,500 before federal and state rebates, has about 238 miles of range.

Making a half-million cars would make the Fremont factory one of the most productive auto manufacturers in the world. Tesla halted manufacturing for a week in February to prepare for Model 3 work. Construction permits reviewed by this newspaper show the company has just begun work, starting about $5 million in work at the main plant.

Goldman Sachs isn’t the only investment firm skeptical of Tesla’s promises to reach record vehicle numbers. Barclays predicted Tesla would not deliver the Model 3 this year.

 

Photo: The Model 3, Tesla’s $35,000 electric sedan, was unveiled Thursday, March 31, 2016. (Tesla Motors via AP)

 

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