Tesla Secures Lithium Suppliers For GigaFactory, Trip Chowdhry Shares Insight

Tesla Motors Inc TSLA is building a battery factory, called GigaFactory, in Nevada. The $5 billion investment is aimed at reducing battery costs by roughly 30 percent, “partly by bringing in in-house materials suppliers,” a Wall Street Journal article explained.

Early on Friday, the source informed that the automaker has secured long-term supplier agreements with North American companies Bacanora Minerals Ltd (which trades on the CVE exchange under the ticker BCN) and US Rare Earth Minerals Inc USMN, which manufacture lithium, the main raw material used in batteries.

Related Link: Tesla's Model S P85D Scores 103 Out Of 100 By Consumer Reports

The Research

• The analyst assured that GigaFactory is the main strategic differentiator for the company, and this announcement indicates that in the first half of 2016, the facility may start with some limited production of batteries.
• Tesla “is creating loosely coupled ‘ecosystems’ with strongly coupled ‘sub-systems,’ and GigaFactory is only one of the many instantiations of it,” the email explained. Sadly, the competition, which includes: General Motors Company GM, Audi, BMW, Mercedes Benz, Honda Motor Co Ltd (ADR) HMC and Toyota Motor Corp (ADR) TM, among others, is quite clueless, the expert added.
• None of the principal automakers have “the intellectual capacity to build their own GigaFactories or TeraFactories,” the firm assured. And, without a GigaFactory, none of them stand a chance of against Tesla.
• Current automakers are making the classical incumbent mistake of assuming that its past successes will guide it into future.
• Global Equities Research has a “durable multi-year investment thesis” for Tesla, based on: “(1) Multiple Auto Products - Model S and Model X; (2) Tesla Energy; (3) Tesla Pre Owned Vehicles (POV); (4) Tesla Services; (5) Tesla Power Trains (Currently Mercedes is the customer); (6) Speculative bet: Hyperloop, which we think is much closer to reality than ever....it was not that long ago, when many Industry Luminaries said that TSLA would only be able to sell 500 Model S cars .... and how wrong were they.”

The firm maintains an Overweight rating and $385.00 price target on shares of Tesla.