Tesla Will Be the "Global EV Leader for the Next Decade," Analyst Says. It Won’t Be Easy

Tesla stock should climb even higher as China and U.S. auto demand improves, said a Mizuho analyst. The road ahead won’t be smooth.

Tesla is scheduled to report second-quarter earnings on July 19.

Vijay Rakesh increased his price target for Tesla (ticker: TSLA) to $300 from $230 and maintained his Buy rating on the stock on Friday. Rakesh believes that the electric vehicle maker will be “the global EV leader for the next decade.”

“Major automakers noted June strength in the U.S. from pent-up demand, China saw holiday discounts driving demand,” Rakesh said in a research note.

The analyst cited the company’s strong second quarter deliveries as a reason for the price target increase. On Sunday, Tesla announced that it delivered 466,140 vehicles in its June quarter, which was a record for the company and above what Wall Street expected.

Nevertheless, with growing competition, rising interest rates, stubbornly high inflation and fears of a recession, some analysts argue that economic pressures put Tesla in a tight spot.

“Unfortunately, in the near-term, we expect macro-economic and perhaps competitive forces to continue to pressure the company’s automotive average selling prices and margins,” Truist Securities analyst William Stein wrote in a research note on Monday. He rates the stock as a Hold with a $240 price target.

Tesla has cut prices of its EVs to help improve demand. The impact of lower-price cars showed when the company reported a decline in margins in the first quarter back in April.

But other analysts say that the price cuts have already proven effective, and that shows in the strong deliveries reported on Sunday.

“Price cuts implemented early in 2023 have paid major dividends for Musk & Co. as demand appears to remain very strong and production efficiencies have allowed for the massive deliveries beat this quarter,” Wedbush analyst Dan Ives wrote in a research note Sunday. He rates the stock at Outperform with a $300 price target.

Traders will be looking to see how margins held up in the second quarter in about two weeks, with the company’s earnings scheduled to be released after the market closes on July 19.

Shares of Tesla were up 0.7% in premarket trading Friday to $278.44. Coming into Friday trading, the stock has surged 125% in 2023.