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Tesla's Gigafactory Gives EV Maker Competitive Advantage To Tap 'Eye Popping' Chinese Demand, Analyst Says

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Tesla's Gigafactory Gives EV Maker Competitive Advantage To Tap 'Eye Popping' Chinese Demand, Analyst Says

Tesla Inc (NASDAQ: TSLA) shares got a price target boost, premised on booming Chinese EV demand.

The Tesla Analyst: Daniel Ives maintained a Neutral rating on Tesla and increased the price target from $560 to $715, while keeping the bull-case price target at $1,000.

The Tesla Thesis: EV demand globally is inflecting higher entering 2021, with EV demand as a percentage of total sales expected to improve from about 3% this year to 10% by 2025, Ives said in a Monday note. This demand dynamic will disproportionately benefit Tesla over the next few years, especially in the key China region, which is expected to account for about 40% of the global EV sales by 2022.

"China remains a greenfield EV market opportunity as we believe overall EV sales can potentially double in the region over the next few years given the pent-up demand for EV vehicles across all price points," the analyst wrote in the note.

Click here to check out Benzinga's EV Hub for the latest electric vehicles news.

China is poised to see "eye popping" demand into 2021 and 2022, Ives said. Tesla's flagship Gigafactory 3 footprint renders the company a major competitive advantage over Chinese star-ups such as BYD, Nio Inc – ADR (NYSE: NIO), Xpeng Inc – ADR (NYSE: XPEV), Li Auto Inc. (NASDAQ: LI).

Demand in Europe is likely to get a shot in the arm from the focus on reducing carbon footprints and EU regulatory catalysts, Ives said. Domestically the incoming Biden will likely focus on "markedly increasing" consumer EV tax credits/incentives, translating another catalyst in U.S. EV adoption beginning in 2021, he added.

While expecting Tesla to hit the ambitious delivery target of 500,000 for 2020, Wedbush is modeling deliveries of 710,000 for 2021. Shrugging off competitive pressure, the firm said, the EV market is growing at a brisk rate that will yield multiple winners going after the EV jackpot.

TSLA Price Action: Tesla shares, which was included in the S&P 500 Index at the commencement of trading Monday, were down 4.8% to $661.

Latest Ratings for TSLA

DateFirmActionFromTo
Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Piper SandlerMaintainsOverweight
Jan 2021Deutsche BankMaintainsBuy

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