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Tesla's Production Road 'Bumpy' But Munster Estimates 40% Higher Deliveries In 2021

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Tesla's Production Road 'Bumpy' But Munster Estimates 40% Higher Deliveries In 2021

Loup Ventures analyst Gene Munster said Sunday that Tesla Inc’s (NASDAQ: TSLA) delivery growth rate will continue to see an upward momentum this year and outpace that of most auto companies.

What Happened: Munster expects the Elon Musk-led company’s delivery growth rate in 2021 to be in the region of 40% on a year-on-year basis.

The rate of growth will outpace those of other auto companies by four-to-five times but would still be less than the Wall Street’s consensus of 57% growth, or 784,800 vehicles, the analyst noted

Muster expects the “production road" for Tesla to be "bumpy — ” adding risk to Tesla’s ability to make cars fast enough in 2021 to meet analyst estimates — but the analyst added, “It does not change our view that Tesla is best-positioned to have leading EV global market share over the next decade.”

Tesla will need to hasten the development of its Austin and Berlin manufacturing facilities to keep up with the demand. "While they made it look easy in Shanghai, ramping production is difficult and will be one of the most important Tesla topics in 2021, along with the status of FSD," Munster said.

Why It Matters: Traditional automakers are in a Catch 22 bind, as per Munster who sees only two options for the legacy firms.

One option is to release a car with all the features and range of a Tesla and sell it at cost, which would lead to erosion of market share and softening of demand.

Another is to subsidize vehicles in order to gain market share from Tesla, but with a limited “margin cushion” it would mean bleeding money with increasing sales.

“Taking it to the logical end, we believe car companies that have been around for 50+ years will eventually (10 years from now) be forced to restructure or go out of business,” wrote Munster.

Over the weekend, Tesla reported it fell just 450 vehicles short of delivering 500,000 units in 2020. The automaker beat Street estimates of 481,261 vehicles.

Price Action: Tesla shares closed nearly 1.6% higher at $705.67 on Thursday and fell 0.17% in the after-hours session.

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

Latest Ratings for TSLA

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

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