When Tesla Motors released its last earnings report, investors were pleased with management’s guide for 50,000 to 52,000 vehicles to be delivered this year, which is at the low end of the original guidance but still within the range. The big concern had been that the automaker would cut delivery guidance, and even now, there are worries that Tesla will miss expectations.

Big-Time Tesla Motors Inc Bull Forecasts Delivery Miss

Nonetheless, Morgan Stanley analyst Adam Jonas remains just as bullish as ever on Tesla. He maintains his Overweight rating and $450 per share price target on the stock.

Tesla’s cash burn to continue

One concern investors have had about Tesla this year is the significant cash burn levels, and that will probably continue through “almost all” of next year, predicts Jonas. He estimates almost $1 billion in incremental free cash burn over the next 12 months.

The analyst notes that Tesla is the quintessential example of what it’s like to launch a car company “from the ground up.” It is very expensive to do so, particularly in the beginning stages and while new cars are being designed. Further, Jonas said Tesla has the added financial burdens associated with vertical integration as it moves battery making in-house with the gigafactory.

CEO Elon Musk said on the earnings call that they’re aiming to be cash flow positive but that he couldn’t make any promises on when that would happen.

Tesla to miss delivery guide?

Jonas warned that he thinks Tesla might not make its guidance for vehicle deliveries in the fourth quarter or even next year. The automaker expects to be producing several Model X SUVs a week by the end of this year, and Jonas expects that 1,500 of the vehicles will be delivered in the fourth quarter and 20,000 in all of next year. He believes his estimate is about half of what Wall Street is expecting for the fourth quarter and 5,000 or more under expectations for next year.

The analyst noted that Tesla focuses on quality at first and also that the Model X is highly complex to produce and comes with a high price point. He’s estimating an average transaction price of $121,000 per unit for next year. Further, he highlighted that Tesla is still dealing with challenges in getting total access to Mainland China. As a result, he thinks 20,000 deliveries is a more reasonable target, and he has set his 2016 delivery estimate for both the Model S and Model X at 70,000 units.

Tesla Model 3 may have a high average price

Tesla has also been working on what it expects to be a mass market electric vehicle called the Model 3, which is expected to start out at around $35,000. However, Jonas expects the real average transaction price to be around $60,000 because he thinks consumers will be drawn to the “desirable feature set” offered by the car. He also thinks the target customer will pay more for an EV with premium features.

On the other hand though, a higher average transaction price might mean fewer units.

Will Tesla move into mobility?

Jonas has for some time been saying that he expects Tesla Motors to move into the mobility space in addition to selling vehicles, and he expects the Model 3, Model S and Model X to all be part of a core vehicle fleet for the automaker’s service model. The company has been focused on sustainable transportation, and mobility is one way to do this in addition to selling electric vehicles. Mobility basically amounts to shared transportation in some ways similar to what Uber offers.

The Morgan Stanley analyst suggests that Tesla management should release details on plans for a mobility service as soon as possible, which would amount to selling miles rather than cars. He asked Musk about the possibility of selling “on-demand shared autonomous electric mobility services to consumers directly from the company’s own platform.”

He said Musk found the question interesting but that the Tesla CEO said it’s not the right time to announce any such plans. So it does sound like the automaker will move in this direction at some point.

Shares of Tesla Motors dipped by as much as 3.26% to $217.99 per share during afternoon trading hours today.

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