Rod Lache of Deutsche Bank, who maintains a Buy rating for Tesla Motors Inc TSLA and a price target of $245, highlighted a handful of positives from Tesla's recent annual shareholders meeting.
No Cannibalization
Lache, in particular, was concerned about how investors would perceive some of the comments made by Elon Musk and the rest of Tesla management.
The executive team indicated that nearly one-third of Tesla’s upcoming Model S sales would come from the recently introduced Tesla 70D model, priced approximately at $75,000. “Most of these orders appear to be incremental, they do not appear to be cannibalizing the run rate of incoming orders for higher trim models," the analyst explained.
Model X Forecast
The orders entail a 50 percent increase in orders from the observed run rate in Q1. The 70D model, Lache said, has expanded the market for Tesla products, to consumers who typically shop for luxury vehicles such as the Mercedes E-class and the BMW 5-series.
"This is a significant positive, as it should mitigate concerns about demand, and concerns that the 70D could prove dilutive to ASPs and margins."
The brand new Model X will start deliveries in about 3-4 months, Lache added. That's “consistent with the late Q3 timing,” and assumes that 7,000 of these models can be sold this year, he said.
Tesla shares have been on the rise in the past three months, increasing nearly 30 percent.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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