Tesla Inc. investors see a heavy lift as they expand to Europe and China. The company will shift its strategy from production to distribution.
Tesla's focus in 2018 is in production. The company said that they will focus on the demand for the cars this year. The company is now prepared to expand to Europe and China. The company's investors and analysts plan to analyze demand trends experienced by the company in their marketing plan. Daniel Ives, a Wedbush analyst, wrote in a note on Monday that Tesla has now shifted from a production story to a demand story. He added that Norway, the Netherlands, and Germany are among the nations with the highest demand for Model 3s in Europe.
He also said that the big question for investors will be watching the model 3 demand trajectory throughout Europe to gauge the pace of unit deliveries and how quickly can it reach the 100,000 units delivery barometer over the next 12 months in the key region. He also eyes China's demand as a potential wild card.
This weekend, Elon Musk, went to Norway, during his visit to Europe. The nation is its third-biggest market since it gives generous incentives to low-emission vehicles. On Monday, China's Global Times tweeted that their first shipment of Tesla's Model 3 had docked at the Port of Tianjin and it is now ready to be delivered to Chinese customers.
The company struggled on the fourth-quarter after its deliveries failed to meet its expectations. The company also needed to impose price cuts on its Model 3 sedans to compensate for the elimination of federal tax incentives. The company failed to meet estimates on its quarterly profit report and it failed to gain the confidence of its investors.
The companies closed with an 8 percent drop on Friday before recovering with its gain on Monday. Over the same period, the S&P 500 Index closed 8 percent higher.
Jed Dorsheimer, an Canaccord Genuity analyst, said that on a note that the last two quarters and recent guidance for the first quarter have removed significant concerns for both production capability and profitability of the critical Model 3. He added that they see a more stable 2019 with far fewer concerns for investors in the company. The analyst believes that the company's market share will increase by 2019.
Morgan Stanley, however, believes that emerging automakers in the electric car market threatens the company's sustainability. Adam Jonas, an analyst in Morgan Stanley, said that he is expecting the next serious competition to come from a clean sheet start-up with access to talent & capital focused on the fastest growing segments of pick-up trucks and SUVs
