Tesla Inc (TSLA) May Be Lagging in Production, But Gene Munster Says the Giant Still Raring to Rule the Transportation World Long-Term

Loup Ventures: It's not easy for Tesla to make the Model 3, but keep in mind no one else is this "ambitious."


Tesla Inc (NASDAQ:TSLA) unveiled some questionable earnings on Tuesday which have tech enthusiast and research analyst Gene Munster – from his research-driven, venture capital firm Loup Ventures – wondering whether the electric car giant is trailing now in the scurry to the top of the leaderboard.

As every major car company is vying to be a major player in the forthcoming transportation battleground, Munster raises the curtain to the future of the electric vehicle (EV) market and autonomy. While 8 auto makers rule the pack today, a decade from now, the analyst believes only 3 to 5 will “own the market for EV and autonomy,” with just two to three of those companies in the tech-verse. Therefore, as far as Munster sees the grand auto OEMs picture, two to three of eight heavyweight auto OEMs now “will be relevant in the future.”

Right now, “Tesla is struggling to produce the Model 3, and at the same time firmly holds its pole position in EV and autonomy,” and though CEO Elon Musk has listed causes behind the challenges nipping at Tesla’s heels, to put it simply: “it’s hard to make a car that advanced for that price at scale,” argues the analyst.

However, though the analyst poses the question asking where Tesla falls in the transportation race, he remains positive on this tech giant: “The reason why Tesla’s manufacturing struggles don’t suggest their falling behind is none of the other auto OEMs have started EV project as ambitious as Model 3. These OEMs have EV offerings, but consumers largely don’t want to buy them so the OEM don’t have to travel through ‘manufacturing hell’ like Tesla is today.”

At the same time, consider the “wild card” that is the autonomy arena, where the majority of car makers are taking over other companies just to have fighting relevance and importance in the future of autonomy. Munster gives competitive threat to Waymo, who has not only made strides but is testing in various places across the country. Nonetheless, do not rule out Musk’s electric car giant, as the analyst asserts that unlike other car manufacturers who cannot even make “a claim close,” “Tesla has all of the hardware (they think) being added to their vehicles today for autonomy.”

“Bottom line,” Munster concludes, odds here even after a challenging third quarter remain with Tesla: “Even if you soften Musk’s hype (i.e. Model 3 production ramp will be liken to a jet fighter in a vertical climb) with a dose of reality, Tesla is still in the driver’s seat (pun intended) to be one of only a few winners in the future of transportation.”

Wall Street is not convinced that Musk’s tech empire’s reward is worth all the risk, especially when taking note that TipRanks analytics exhibit TSLA as a Hold. Based on 21 analysts polled by TipRanks in the last 3 months, 5 rate a Buy on Tesla stock, 8 maintain a Hold, while 8 issue a Sell on the stock. The 12-month average price target stands at $313.00, marking a nearly 5% upside from where the stock is currently trading.