Tesla's 'Golden Goose' Quest: Analyst Assesses Potential To Achieve 30-50% Battery Cost Cuts

Zinger Key Points
  • Tesla announced in January it plans to invest over $3.6 billion to grow its Giga Nevada.
  • It plans to invest in 2 new factories at the site, including a 100 gigawatt-hour cell factory and its first high-volume Semi factory.

A Tesla, Inc. TSLA bull came away impressed from a visit to the electric vehicle giant's Giga Nevada, which manufactures lithium-ion batteries and EV components.

The Tesla Analyst: Wedbush analyst Daniel Ives has an Outperform rating and a $183 price target for the stock.

The Tesla Thesis: Aiming to reduce battery costs by 30-50% over the long term is the “golden goose” for Tesla, Ives said in a note.

The company is taking great efforts to meticulously create cost efficiencies while strategically expanding, the analyst said following his walk around the factory. It is now aiming to produce about 100 Gigawatt-hour capacity of in-house 4680 battery cells per year,  he said, adding that this along with Panasonic Holdings Corp. PCRFY cells, would be sufficient to power about 2 million annually.

This, according to the analyst, will be a crucial step to ramp up battery production nearly 29 times by 2030.

See Also: Best Electric Vehicle Stocks

Giga Nevada produced 7.3 billion battery cells, or 37 GWh+ annually, and supplied a total of about 3.6 million drive units, the company said at the start of the year, Ives noted. With the $3.6 billion investment in Nevada announced in January, the company plans to nearly triple its historical GWh output, he added.

"We view this as a major step forward for Tesla which we believe could potentially be ahead of schedule while from the bird’s eye view creating large economies of scale for costs and laying out the blueprint for the future," Ives said.

The analyst noted that the 4680 batteries focus on a 16% increase in range and six times power while cutting capex per GWh, and its next-gen drive units aim for a 75% reduction in silicon carbide, zero rare-earth metals usage and a 50% reduction in factory footprint.

"The all-important 4680 production ramp, battery cost-cutting of 30% – 50%, and margins will be the largest focal points of the year along with units/gross margins balance," the analyst said.

Tesla Price Action: Tesla ended Thursday's session up 0.86% at $184.47, according to Benzinga Pro data.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

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Posted In: Analyst ColorEquitiesNewsReiterationTop StoriesAnalyst RatingsDaniel Iveselectric vehiclesEVsExpert OpinionGiga NevadamobilityWedhush
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