Tesla Inc is heading into an inflection point next year as it looks to double production capacity to about 2 million units annually with the opening of two new Giga factories by the end of 2022.
The Tesla Analyst: Wedbush analyst Daniel Ives has maintained an Outperform rating and a price target of $1,400 a share on the Tesla stock.
The Tesla Thesis: A Tesla bull, Ives, said the Elon Musk-led electric vehicle company has navigated the ongoing chip supply shortages better than all other automakers in the past six months and is well-positioned to leverage that in 2022.
Ives pointed out that the Austin, Texas-based headquarter will further benefit with higher capacity when two of its Giga factories double capacity to nearly 2 million vehicles annually.
In Berlin, Tesla’s Gigafactory is expected to secure the start of production approval in early 2022. The electric vehicle maker is expected to wrap up construction at Giga Texas by Dec. 31.
“Right now Tesla has a high-class problem of demand outstripping supply with this issue now translating into ~5-6 month delays for Model Ys, some Model 3s in different parts of the globe,” Ives wrote in a note.
“The key to alleviating these issues is centered around the key Giga openings in Austin and Berlin which will alleviate the bottlenecks of production for Tesla globally.”
Ives has estimated Tesla still has some red-tape bureaucratic issues to resolve in Berlin before it begins production in the “January/February timeframe.”
The brokerage has previously estimated EVs will globally represent 10% of autos by 2025 and 30% by 2030. According to Ives, China could represent 40% of Tesla’s deliveries next year, or worth $400 per share in 2022.”
Why It Matters: Tesla delivered record third-quarter sales but said it was struggling with chip supplies, forcing its Musk to say the electric vehicle maker does not have a demand problem, but it faces a production ramp-up issue.
Legacy rivals such as Ford Motor Co General Motors Co were forced to halt production this year at various U.S. factories due to the chip crisis.
TSLA Price Action:Tesla shares gained 2.5% Monday, closing at $1,093.94 a share.
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