Photo: Trade Station
Credit Suisse raised the Tesla (NASDAQ: TSLA) price target 100% to $800, the second-highest on Wall Street. The firm is raising its delivery forecast for 2021 with the expansion of Giga Shanghai, and the start of production in Giga Berlin and Giga Texas.
Credit Suisse analyst Dan Levy raised Tesla's price target to $800 from $400, and keeps a Neutral rating. Expansion of production capacity is key for 2021, according to the firm, and will ensure further growth in volumes. With an expansion in Shanghai, as well as manufacturing facilities in Texas and Berlin, Tesla has an installed capacity of 1.44 million units for 2021, up from 840,000 previously. Thus, Levy raises its 2021 delivery forecast to 853,000 from 791,000 previously.
"With expansion in Shanghai, and new facilities in Texas and Berlin, we estimate Tesla will exit 2021 with installed capacity of 1.44mn units vs. 840k currently ... the added capacity underscores our forecast for 2021 deliveries of 853k vs. consensus 791k."
The firm notes that 2020 has provided some good lessons.
- It was clear that the market is paying Tesla to take the capital. The company raised $12 billion in 2020 and saw no decline in its share price, which means Tesla's implied cost of capital is negative. This is a significant advantage over other automakers, as the company has the means to increase production capacity and invest in any projects and acquisitions at its own discretion.
- Significant progress in margin, showing Tesla has further opportunity to cut cost and thus unlock lower pricepoints.
- Much improved at setting and meeting expectations.
Credit Suisse predicts production of 5.1 million units by 2030, up from 500,000 in 2020, placing Tesla in the top 10 of global OEMs. This is realistic due to the fact that electric vehicles are spreading very quickly, while legacy OEMs have faced big problems in the transition to their production.
Levy also stressed that the firm's model does not fully reflect the possibilities of Tesla's future income streams such as energy, software, Robotaxi, Insurance, charging, etc.
"Maintaining elevated multiple on base case of 30x given opportunity for future revenue streams not fully reflected in our model such as Energy, software, robotaxi, insurance, and charging, Risks: increased competition, misexecution on growth, increased EV uptake."
© 2020, Eva Fox. All rights reserved.
We appreciate your readership! Please share your thoughts in the comment section below.
Legal Disclaimer --
This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.