Investor says Tesla sales will wane soon

NEW YORK— Prominent Tesla Inc. short seller David Einhorn thinks the third quarter was the high-water mark for the electric-car maker, because sales of pricier Model 3 sedans will wane going forward.

“We believe this will be as good as it gets for the company,” Einhorn said on an earnings call for Greenlight Capital Re Ltd., the reinsurer tied to his hedge fund, Greenlight Capital. “We believe they’ve exhausted most of the demand from customers who can afford the highest-priced versions of the Model 3.”

Tesla blew away Wall Street’s expectations by reporting just the third profitable quarter in its history last month. The company delivered more than 56,000 Model 3s to customers, and the average selling price approached $60,000 (U.S.).

Chief executive officer Elon Musk has said he expects Tesla to report positive net income and free cash flow from now on. To deliver on that prediction, he’ll have to count on strong demand for long-range battery and higher-performance versions of the car that can reach $70,000.

Musk, 47, has yet to produce a long-promised version of the Model 3 with a $35,000 starting price. In May, he tweeted that Tesla would “lose money & die” if it shipped the cheapest iteration of the car before achieving higher production levels.

“If we could produce the $35,000 car today, we would do it,” Musk said.

“There’s more work to do before we can make a $35,000 car and have it be part of the gross margin.

“We’re probably less than six months from that, but that’s our mission.”