Why Loop Ventures Is Bullish On Tesla

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Includes: TSLA
by: Gil Weinreich

Summary

Loup Ventures co-founder and veteran Gene Munster sees Tesla Model 3 production turning a corner in 2018.

‘Near term, we expect another miss in Model 3 production’.

Long term: ‘Every automaker that wants to compete… needs to go through the production pain Tesla’s experiencing today’.

Artificial intelligence and virtual reality-focused VC firm Loup Ventures co-founder Gene Munster expressed strong optimism about Tesla (NASDAQ:TSLA) in a cluster of New Year predictions:

Tesla Model 3 production ramps from 2,500 in 2017 to greater than 150,000 in 2018. Near term, we expect another miss in Model 3 production, but in 2018 we predict production will turn the corner. We continue to stress that Model 3 production over the next several quarters will be largely a guessing game and that short-term production numbers do not materially affect the long-term story. The last update on Model 3 production calls for "a production rate of 5,000 Model 3 vehicles per week by late Q1 2018," which we believe is ambitious. That said, we're encouraged by hundreds of Model 3s have been spotted at delivery centers and at the Fremont factory shown in a video here, along with several suppliers reporting that they are back to delivering Model 3 parts at volume.

The reason we remain upbeat on the Tesla story despite the prolonged Model 3 production problems is that EV and autonomy are the future. Tesla is fighting to gain production scale to create that future. While other car manufacturers build gas-powered vehicles at scale, building autonomous EVs is a vastly different process that will require traditional auto manufacturers to re-engineer their production facilities. That means every automaker that wants to compete in the future needs to go through the production pain Tesla's experiencing today. Here's our recent note on Model 3 production outlook."

Source: 8 Tech Predictions for 2018