Tesla (TSLA) Factory Pause a Precursor to 5,000/wk Production, Global Equities' Chowdhry Says; 'Buy on Weakness'

Analyst Trip Chowdhry of Global Equities Research is telling clients to buy Tesla (NASDAQ: TSLA) on weakness as the Model 3 factory pause is a positive, setting up for an increase toward 5,000 units per week.

Chowdhry highlights:

• Production ramp up is a Step Function vs. a Continuous Function
• Production of TSLA Model 3 has been steadily improving - from 500 per week to 1,000 per week to 1,500 per week to more than 2,700 per week as we witnessed on April 13
  • Please re-read our April 13, April 10, and April 07 reports, which are attached below
• TSLA has paused the production of Model 3, to setup its Model 3 Production system to 5,000 units per week
  • To increase the production of Model 3 from about 2,700 per week to 5,000 per week, the following activities happen in the Factory:
    • the Robots have to be reprogramed for higher assembly speed
    • the inspection sensors sampling rate has to be doubled and error rate has to be accordingly adjusted
    • the conveyor belt speed has to be doubled
    • the self-maintence system has to be upgraded, the higher density oil has to pumped up, to handle the increased speed of the various moving parts
    • at least 2 sample runs have to occur to tune and fine tune and calibrate the assembly line
• The pause of the production of Tesla Model 3 is positive for TSLA Stock:
  • It indicates that TSLA is ready to perform a step function increase in Model 3 production, to 5,000 Units production by end of 2Q'2018
• Weakness in TSLA Stock is a buying opportunity

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