The Tesla Giga Shanghai upgrade has been extremely successful and has already reduced the wait time for vehicles. This trend is a “scary prospect” for Tesla's competitors, says Piper Sandler.
Piper Sandler analyst Alexander Potter, in a recent note to customers, drew attention to the reduction in delivery wait times in regions supplied by the Tesla factory in Shanghai. After extensive modernization of production lines, Giga Shanghai has significantly increased its production capacity, which will be especially evident after receiving the September sales reports. The analyst predicts even higher monthly production volumes in the coming months and suggests that at some point, Tesla will start cutting prices, capturing more market share.
“As production ramps and wait times fall, we think Tesla will remain singularly capable of quickly meeting consumer EV demand at palatable price points. While other brands struggle to ramp production, Tesla will (presumably) start cutting prices, thereby boosting market share at everyone else's expense.”
Potter also noted that while production continues to rise, margin expansion is likely to be limited by declining vehicle prices. Therefore, he does not recommend that investors expect gross margins to “sustainably exceed 30%,” as was the case in the second half of last year and early 2022.
In addition, the analyst stressed that Tesla continues to solve supply bottlenecks and, if it achieves this, it would be a really scary prospect for other automakers. Tesla itself aims to reach a production capacity of 20 million cars a year by 2030.
“If Tesla's upstream supply bottlenecks truly are breaking, we think it's a scary prospect for other brands.”
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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.