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Here's Why Tesla (TSLA) Shares Are Falling Today

Shares of Tesla TSLA fell 3% in midday trading on Monday after investors were not impressed by the automaker’s Model 3 sedan launch late Friday at an event in its Fremont, California factory.

Analysts at Goldman Sachs GS called the event “a bit anticlimactic,” noting no noticeable chances in the car’s features from its earlier test versions. The Model 3 “remains a de-contented, smaller version of the Model S; and the production vehicle showed no incremental (human-machine interface) features from the vehicle unveiled last year.”

“We believe the Model 3 was as good as or better than expected, and pricing was as expected with considerable initial up sell,” Bernstein's Toni Sacconaghi wrote in a client’s note on Monday. “That said, the rubber now hits the road, and the fundamental questions remain unanswered.”

Sacconaghi also commented that “CEO Elon Musk sounds increasingly squeamish about the production ramp.” Musk made a comment that Tesla is “going to go through at least six months of manufacturing hell” to produce the Model 3.

Tesla is counting on the success of its Model 3 to help make the company a profitable one. The company has already spent $2 billion in cash this year ahead of this launch.

The Model 3 is designed for easy production, with the company aiming to produce about 20,000 per month by December. The sedan won’t be available to consumers until early 2018 for $35,000.

Tesla remains a Zacks Rank #3 (Hold). Tesla is expected to report its quarterly earnings on August 2nd after market close. Zacks expects the electric car maker to report a loss of $2.00 per share and revenues of $2.55 billion.

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