Giga Shanghai

Tesla China's Contribution Could Be Worth $400 Per Share On Its Own, Says Wedbush Analyst


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Wedbush Managing Director of Equity Research Dan Ives believes that Tesla (TSLA) China is an integral part of the EV automaker and could contribute US$400 per share to TSLA stock as it continues to grow. Tesla stock has gained 233% so far this year. Gigafactory Shanghai has contributed significantly to the company’s smashing numbers in Q1 2020 and impressive production/delivery results in the second quarter.

Daniel Ives noted that Tesla China could drive Tesla shares’ gains even higher because of strong demand for Giga Shanghai’s locally-produced vehicles. As of this writing, the Shanghai Gigafactory produced the Model 3 SR+ and the Model 3 Long Range RWD. Last month, Tesla China sold almost 15,000 locally-made Model 3 units, making up 23% of the country’s overall EV market. Demand for the Model 3 Long Range RWD appears to be strong as previously predicted by insiders in the local Chinese car market.

According to Barron’s, Ives took note of the MIC Model 3’s strong demand in China. “Strong Model 3 demand out of China remains a ray of shining light for Tesla in a dark global macro and appears to be on an eye-popping run rate to hit 150,000 unit deliveries in the first year out of the gates for Giga 3 [Shanghai], which is driving some strength for Tesla as well as Model Y deliveries starting to ramp as well,” he wrote in a report.

Ives' prediction might stand the test of time as Giga Shanghai ramped production coming into the third quarter. Local sources told Tesmanian that Tesla’s Gigafactory in China may have already exceeded a production rate of 4,000 after resolving its battery bottleneck issue and switching to two shifts. Giga Shanghai’s construction projects are also ramping with the Model Y production facility seemingly moving faster than the rest.

Before Giga Shanghai starts MIC Model Y production, however, it may start manufacturing the MIC Model 3 Performance and Long Range AWD variants. In June, Tesla China submitted its application to product the Performance and Long Range AWD variants in Giga Shanghai to the Ministry of Industry and Information Technology (MIIT).

It only took one month for Tesla China to get approval from the MIIT to produce the locally-made Model 3 Longe Range RWD. And Giga Shanghai started deliveries for the RWD variant ahead of schedule a little less than three months later in May. Given the Long Range RWD’s timeline, Giga Shanghai could start producing and delivering the Performance and AWD variants well before the end of the year.

Currently, Ives put a "Neutral" rating on TSLA and set a price target of US$1,250, which is well below the current stock price at US$1,394.28. However, the Wedbush analyst’s bull case for TSLA is US$2,000

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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 Ma. Claribelle Deveza, 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. Ma. Claribelle Deveza holds zero share 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

Ma. Claribelle Deveza

Ma. Claribelle Deveza

Longtime writer and news/book editor. Writing about Tesla allows me to contribute something good to the world, while doing something I love.

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