Tesla Investors—CR Was Wrong on iPhone Too: Loup

Shares of electric vehicle maker Tesla Inc. (TSLA) continued to fall this week as the media floods with negative coverage of Elon Musk's auto company. Most recently, the Palo Alto, California-based EV maker was hit with a downbeat review from Consumer Reports (CR) magazine, which indicated that the company's most affordable model, the Model 3 sedan, had "big flaws," such as slower breaks than a full-sized pickup truck. In response to the news and the sell-off in TSLA stock, one team of analysts on the Street suggests that the reports are overly pessimistic, noting that the CR was once critical of Apple Inc.'s (AAPL) original iPhone. (See also: Musk Scorns ‘Holier-Than-Thou' Hypocrisy of Media.)

Despite mounting fears that Tesla will not deliver as promised with its first mass-market vehicle as it burns through billions in cash to keep up with niche EV startups and traditional automakers in the burgeoning market, Gene Munster of Loup Ventures says his firm "continues to believe the Model 3 will represent the turning point in the world’s adoption of EVs." 

CR Review 'Feeds into the Tesla's In Trouble Narrative' 

Munster indicated that the CR review feeds into the "Tesla's-in-trouble'' narrative, yet he notes that Tesla has more demand than it can supply for the Model 3. While "the variation in braking distance is a serious issue that needs to be seriously addressed," the analyst sees the review as just another speed bump as Tesla ultimately fixes issues either through over-the-air updates or a tougher hardware upgrade. 

Loup Ventures cited tweets from Tesla's high-profile Chief Executive Officer Elon Musk in which he promised to solve braking issues with firmware, software and hardware updates. CR will retest the vehicle after improvements expected by 2019. "The report’s negative comments overshadowed an otherwise positive review, highlighted by the fact that the Model 3’s 350-mile range was the longest ever recorded in a CR test," wrote the investment firm. 

Munster criticized CR as having a history of being "skeptical of other groundbreaking, mass market products before." The analyst indicated that CR had highlighted a handful characteristics about the iPhone, such as an inability to remove the battery, a headphone jack that required an adapter, and other issues that later seemed trivial. 

"Complaints about the Model 3’s complex controls and the lack of buttons remind us of Steve Ballmer’s infamous take on the iPhone’s prospects because it did not have a keyboard," wrote Loup Ventures. (See also: Why the Bulls Still Believe in Tesla.)