By Michael Elkins
A Jefferies analyst adjusted their price target for Tesla (NASDAQ:TSLA) to reflect the electric car company’s recent 3:1 stock split. The company’s new price target for 12 months is $350.
The analyst spent a day in investor meetings with a visit to Tesla’s new plant in Berlin. The head of Tesla’s investor relations, Martin Viecha focused on capacity build and further reduction in COGS/unit during the meetings.
Viecha highlighted how the Berlin and Austin ramp up will dilute higher costs.
The analyst wrote that “Tesla expects a further step down in costs from a new platform in 2024, likely a robotaxi given recent comments from CEO Musk, although we understand some flexibility on product concept. Inflation Reduction Act wording leaves room for interpretation but should enable bigger contributions to lower battery cost/kwh up to $45.”
He also believes that a higher vertical battery integration is giving Tesla an edge in localizing material sourcing and processing to qualify for cost incentives while sales incentives extend to corporate buyers.
Tesla’s Berlin plant currently produces around 1,000 units per week on a 2 shift/5day schedule. The electric vehicle maker is aiming to produce 5,000 units per week by the end of the year. Full capacity for the plant looks like 500,000 units on a 4 shift/7day schedule. Though the analyst is concerned with how many units can be sold with Tesla’s limited line-up, Tesla sees scope for 3-4M units combined for the Model 3 & Model Y. In Jefferies’ view Tesla continues to challenge the industry's business model at multiple levels.