Aside from another delay in the delivery of the Model X, Tesla’s third quarter earnings report left an optimistic taste in the mouths of investors, but there is always a bear case to be made. On that front, Merrill Lynch’s Joe Lavallo weighed in with some bold statements in a note to his firm’s investors, originally reported by Daily Kanban. Lavallo was not going for the “all sold out” report Tesla gave to analysts and went so far as to suggest there may be 3,000 Model S sedans sitting around without any takers — an enormous figure, considering the automaker’s volume. Looking at the records, Lovallo’s case is difficult to substantiate.

A 3,000 car backlog?

Tesla reported 7,785 units of its flagship sedan delivered in the third quarter worldwide, which was good enough to keep pace with company’s estimated totals of 7,800 despite the shutdown of its Fremont plant in order to prep for Model X production. Throughout the earnings call with brokerage firm analysts, CEO Elon Musk stressed the company’s pressing issue was producing enough cars to meet the strong demand.

“Essentially in the third quarter we sold every car, that was including cars from like showrooms and everything we basically had,” Musk said. “There was just nothing left to sell.”

Daily Kanban has Merrill Lynch’s Lavallo questioning that assertion after a review of the automaker’s finished goods inventory. In Lovallo’s calculations, there are “approximately 3K vehicles stocked in inventory or transit” that make up the $226 million reported by the automaker. That would sound like a refutation of Musk’s statements to analysts, but the numbers from the second quarter suggest it’s not a “gotcha” moment for Merrill.

In an article published on Forbes.com, Mark Rogowsky points out Tesla’s finished goods from the second quarter amounted to $250 million, some $24 million more than the total preoccupying Lovallo. Meanwhile, Tesla officials noted that production levels dropped to 7,200 vehicles because of the factory shutdown. So they kept the sales totals consistent though new car inventory dropped.

Using that evidence, the backlog of 3,000 unwanted cars appears far-fetched. Musk’s assertion they were selling “extra” cars would explain the steadiness in sales despite the dip in inventory. (We reached out to Tesla for comment on Lovallo’s note and a company spokeswoman replied there was no official statement from the automaker.)

Declining interest and issues in China

According to Consumer Reports, anyone who will settle for a loaner or test Model S from showrooms can put their hands on one at a discounted price — as much as $14,000 lower than the listed MSRP in some instances. It would be natural for Musk to consider these slightly used cars separate from the inventory he noted was sold out, but it has predictably caused rumblings in some investor circles.

The other main point in the Merrill bear case related to Tesla’s problems making inroads in China.

While the complications of delivering new electric vehicles to China have been well documented, Lovallo described troubles unforeseen there and in Europe, which “indicate meaningful international headwinds for the company,” Daily Kanban quoted. Forbes has China at 27% of Tesla’s total sales already, a number that has grown substantially in the short time they have been open for business there.

Will China become the biggest market for Tesla? The steep price of the Model S in the world’s largest auto market (due to import tariffs and other factors) may not win over an enormous audience, even with available EV incentives. Tesla’s decision to raise Model S prices in Europe to account for currency fluctuations also is worth scrutiny, but there is no reason to believe it will stifle demand. There is no track record to analyze just yet.

During the third-quarter earnings call, Tesla’s chief executive explained the automaker didn’t break out monthly sales totals because “the media tends to read all kinds of nonsense into the deliveries.” It would have been an indelicate time to include analysts in the group overhyping month-over-month figures, but in Lovallo’s case Musk may have been right on the money.