It rather sounds like Osborne’s biggest concern is actually with Tesla itself rather than SolarCity, although he hasn’t made any changes to the Tesla side of the equation. He’s still modeling for a ramp of early Model 3 sales in the first half of 2018, but he’s starting to be concerned that this is too ambitious because of the lack of announcements regarding prototypes, suppliers ramping, or other details. Also he notes that the previous ramps and production delays on the Model S and Model X could mean that delivering the Model 3 by 2018 is just too ambitious of a target
The Cowen analyst added that the Gigafactory is a key piece of the puzzle and for Tesla to become cash flow positive, so he will be monitoring the factory’s ramp. So far, the automaker has spent $504.3 million in capital expenditures on the Gigafactory, which is only 25% of the expected total, so Osborne would like to see signs that the company’s partners are indeed ramping on the other $2 billion to $3 billion. He also warns that if battery costs remain at around $200 per kilowatt-hour when the company is targeting $100 per kilowatt-hour, he doesn’t see how it’s possible to reach a 20% gross margin for the Model 3.
Further, he’s concerned about the many EVs from competitors that will be landing on the market within the next one to three years.