Tesla, Inc.'s TSLA Giga Berlin received approval for commencing operations late last week. An analyst at Wedbush delved on what the development means for the EV maker.
The Tesla Analyst: Daniel Ives has an Outperform rating and $1,400 price target.
The Tesla Thesis: Giga Berlin's production importance is critical to the overall success of Tesla's footprint in Europe globally, Ives said in a note. The current practice of producing cars in China at Giga Shanghai and delivering to customers throughout Europe is not a sustainable trend, he added.
"The Berlin factory establishes a major beachhead for Tesla in Europe with potential to expand this factory to production of ~500k vehicles annually with Model Y front and center over the coming 12 to 18 months," the analyst said.
Electrification is picking up pace in Europe, while competition in the sector is intensifying from every angle, Ives said. The analyst noted that Volkswagen AG VWAGY is "doubling down on its EV ambitions."
Giga Berlin, the analyst said, is a "major competitive advantage" for Tesla, as it helps expand the company's supply footprint in the key region.
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Demand for Tesla cars are outstripping supply, as evidenced by the 5-6 months delays for Model Ys and Model 3s across the globe currently, Ives said. Openings of Gigas in Austin and Berlin, will help production bottlenecks, he added.
By the end of 2022 Tesla will have the capacity/run rate for about 2 million units annually, up from about 1 million in 2021, the analyst noted. Unit growth, according to the analyst, is front and center in 2022.
"While China will be a key growth driver, we believe demand is rapidly building for Tesla's Model Y in the US and Europe, with 2022 so far looking like another "breakout year" for Tesla and the EV industry," Wedbush said.
Tesla Price Action: Tesla shares closed Friday's session down 0.12% at $838.29.
Photo: Courtesy of tesla.com
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