German Competition Will Rebound In Tesla's Favor; Report

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Berenberg Bank of Hamburg, Germany, a long-term believer in Tesla, says worries about demand for Tesla vehicles are overblown

. Carsalesbase data shows in all of 2018 Tesla sales in Europe totalled 29,614 compared with its U.S. sales of 191,627.

The Tesla share price has been under pressure lately after first quarter deliveries fell over 30% to around 63,000 compared with the previous quarter. Tesla sales would have to accelerate hard if the company guidance of up to 400,000 vehicles could be delivered in 2019. Tesla finances are also causing concern with $900 million of cash burn in the first quarter. Tesla said it will start generating cash in the rest of this year.

Long-time supporter, Morgan Stanley analyst Adam Jonas, has turned against Tesla, who questioned whether there will be enough demand in a market which favors SUVs.“This year’s sharp deceleration in demand has led to a substantial curtailment of the company’s ability to self-fund through free cash flow generation, at the margin potentially impacting the firm’s access to capital,” Jonas said in a report last month.

In our opinion, Tesla has grown too big relative to near-term demand, putting great strain on the fundamentals,”Berenberg Bank’s Haissl is confident about Tesla’s prospects though, saying he expects a solid second quarter with significant free cash flow.

 

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