Tesla reports earnings Wednesday, and analysts want a better look into the future

Key Points
  • Tesla will report earnings for the first quarter of 2017 on Wednesday.
  • Analysts and investors will be looking for clues on the Model 3.
  • Tesla may also discuss upcoming solar roof tiles, Tesla semi truck, and other projects.
What to expect from Tesla earnings
What to expect from Tesla earnings

Tesla is scheduled to report its first-quarter earnings on Wednesday, and eyes are focused on the future.

The California-based, sustainable energy company delivered a record number of its electric vehicles in the first quarter, and its stock has been hitting all-time highs in the days leading up to the earnings announcement.

But Tesla has some of its biggest plans still ahead of it, and analysts may be focusing less on the past, and more on watching for signs of whether the company can deliver later this year on some of its most ambitious goals.

In particular, Tesla is scheduled to begin production of the highly anticipated Model 3 in July, a $35,000 sedan that Tesla has billed as the vehicle that will mark its transition from a luxury carmaker to a far larger manufacturer serving the average buyer.

"We are looking for information on the production schedule for the Model 3, because that is the linchpin of any thesis about the stock," said CFRA analyst Efraim Levy in an interview with CNBC on Tuesday. "The timing, the success, of that model is critical for them to justify the current stock price, or really, any stock price."

Levy added that he considers Tesla's quarterly results to be "mostly immaterial" to the investment thesis. That said, analysts surveyed by Thomson Reuters are expecting Tesla to post a loss of 82 cents a share on revenue of $2.61 billion for the first quarter.

Cash flow is an exception. That is a number investors want to see since it is an indicator of whether Tesla will yet again seek capital from markets.

The company finished the fourth quarter of 2016 with $3.4 billion in cash, but has said it plans to spend between $2 billion and $2.5 billion in the first half of 2017. Much of that will go to the Model 3.

Tesla's ability to ramp up manufacturing has been a long-standing concern among analysts.

Tesla CEO Elon Musk has repeatedly said he wants to be able to produce 500,000 cars annually by the end of 2018. Last year the company produced around 84,000.

More record highs for Tesla?
More record highs for Tesla?

UBS analyst Colin Langan said in a note Tuesday that investors will likely react strongly to any updates in Model 3 timing, but said he remains "cautious on the launch timing given TSLA's history of delays."

Langan added he expects it's unlikely that Tesla can even sell its Model 3 profitably at this stage.

"At our estimate of $155/kWh battery pack cost in 2025, the Model 3 will still cost about $7,000 more to build than an equivalent ICE vehicle," he wrote.

Langan also mentioned Tesla's cash burn as a focal point, as he expects the company will likely have to return to markets for capital again at some point to fund its development.

In a note published Monday, Oppenheimer analyst Colin Rusch said that in light of the company's record number of 25,000 vehicles delivered in the first quarter, he is watching the gross margins closely to see how much Tesla had to spend per vehicle sold.

"We believe manufacturing efficiency is critical for long-term earnings power and execution on Tesla's plans to become the world's leading manufacturing company," Rusch said.

Cowen analyst Jeff Osborne said in a note published Monday that he sees "likely ramp delays" on the Model 3.

"As Tesla's Model 3 ramp proceeds, we continue to have more questions than answers," he wrote. Osborne did note recent news reports that factory robots from German industrial robot maker Kuka arrived in the Tesla's Fremont, California, factory and are currently being installed.

However, given that "Tesla still has not offered reservation holders a way of configuring their Model 3 year and robots are not yet in place," Osborne wrote, "we question whether the company will give full-year guidance on the Model 3 yet."

Tesla was not immediately available for comment on the status of the robots at the Fremont factory, or on Model 3 configuration plans.

The Model 3 is not the company's only spinning plate. Among other things, Tesla executives have said they plan to begin offering the company's solar roof tiles over the summer as well, and unveil the Tesla semi truck in September.

The idea of developing semi truck "makes sense" for Tesla, Levy said. "You are taking an existing core technology and leveraging it to another market."