Tonight marks a week since Tesla Motors delivered the very first Model X’s, and analysts are lining up to put out notes with their thoughts on the vehicle. One thing sticks out to Morgan Stanley analyst Adam Jonas, and that’s the price. He thinks it’s too expensive, so he cut his price target for Tesla.

Model X Pricing Triggers Price Target Cut For Tesla Motors Inc

Tesla has a backlog

Most who have seen or read about the Model X agree that it’s a very nice vehicle, but the most expensive model is priced at $132,000, which Jonas says is too much, particularly for early adopters. The Morgan Stanley analyst trimmed his price target for Tesla from $465 to $450 per share but maintained his Overweight rating on Tesla.

Tesla has had a backlog of orders for the vehicle for years, but the question now is whether people who have ordered a Model X will start pulling their orders and demanding their $5,000 deposit back because of the high price.

Are the Model X’s specs good enough for the price?

Indeed, the features of the Model X are quite impressive, and Jonas notes that they did have very high expectations for it, which Tesla was able to deliver. However, the analyst also points out that the Model X pricing appears to have a higher average transaction price that’s as much as $25,000 higher than it is for the Model S. He said it’s also about $10,000 to $15,000 higher than they had been expecting based on early spec options and list pricing.

Further, even though the average transaction prices will probably decline gradually over time as Tesla adds the lower-spec models into the production mix, he still thinks the Model X will be priced higher than they expected. As a result, he believes Tesla might struggle to meet expectations for volumes.

Further, he said the automaker will have to lower the price of the SUV in order to deliver over 20,000 vehicles next year. In addition to cutting his target price for Tesla, he also trimmed his delivery estimates for the Model S by 5,000 to 10,000 units starting next year and going through 2018.

Tesla already struggling to meet volume expectations

In a report last week, Jefferies analysts Dan Dolev and Trevor Young pointed out that Tesla has a very difficult road this quarter in order to meet its previously provided guidance for units. The automaker announced last week that it had delivered about 11,580 vehicles during the September quarter, which was in line with guidance.

However, this means that in order to meet the low end of the full year guidance, Tesla will have to deliver 16,843 vehicles during the fourth quarter. The automaker will have to deliver 19,343 vehicles to reach the midpoint of guidance and 21,843 units to make the high end.

Assuming that production of the Model S remains about flat, the company will have to deliver about 4,300 Model X’s during the fourth quarter, which seems like a tall order as it only delivered a handful last week to top executives and board members.

Can Tesla ramp production fast enough

The Jefferies team noted that with the one-week planned shutdown during the third quarter, Tesla produced about 1,300 vehicles per week. However, in order to meet guidance for the full year, the automaker will have to up production 89% quarter over quarter to 1,700 vehicles per week.

Nonetheless, Jonas maintained his Buy rating and $365 per share price target on Tesla. Shares of Tesla Motors edged lower in early trading, falling as much as 2.06% to $241.07 per share.

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