Goldman: Tesla shares to drop 30% in the next 6 months due to increased competition

  • Goldman Sachs resumes coverage on Tesla shares with a sell rating, predicting a lower share of the electric car market.
  • Analyst David Tamberrino cites the significant number of electric vehicle launches from large automakers over the next several years.
Newly manufactured Tesla vehicles are placed on transport trailers from a large inventory of newly made vehicles in Burbank, California, August 24, 2018. 
Mike Blake | Reuters
Newly manufactured Tesla vehicles are placed on transport trailers from a large inventory of newly made vehicles in Burbank, California, August 24, 2018. 

Tesla's electric car sales will suffer due to increased competition from other luxury automakers, according to Goldman Sachs.

The firm resumed coverage of Tesla with a sell rating, predicting the competition will cut into the company's share of the electric car market.

"We see the medium-to-longer term industry backdrop as challenging for Tesla's products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors — at a time when the company's product cadence hits a gap," analyst David Tamberrino said in a note to clients Tuesday. "We believe the company will see pressure to its lead in EVs as competition catches up."

Tesla shares were down 4.2 percent Tuesday.

Tamberrino gave a $210 six-month price target for Tesla shares, representing 30 percent downside to Friday's closing price.

The analyst noted the significant number of electric vehicle launches from large automakers — including Audi, BMW, Jaguar and Porsche — expected over the next several years.

"With regional mandates and tightening CO2 standards, both traditional and new entrants are expected to launch several EVs in the coming years — with a large crescendo in the early-to-mid 2020s," he said. "Altogether, we remain bearish on the company's ability to execute, achieve its targeted production ramp/margins, and sustain FCF [free cash flow] generation."

Asked for comment, a Tesla spokesman referred to statements made by executives, including CEO and co-founder Elon Musk, during the second quarter conference call.

Last month, Goldman Sachs suspended its coverage on Tesla shares after the bank said it was acting as a financial advisor "in connection with a matter that is fundamental" to the carmaker. That was after Musk created a firestorm by tweeting that he was considering taking the company private. He has since said the company will remain publicly traded.

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