Tesla: Strong deliveries don’t change the bear closet

No one can accuse Elon Musk of lack of ambition and often throughout his career, Tesla’s (TSLA) opponents had to hastily back off after underestimating the guru-like CEO’s ability to defy the skeptics. However, after the EV leader’s annual meeting in 2021, Needham’s Rajvindra Gill finds the ambitious goal of the company unrealistic.

The company reiterated its commitment to deliver 20 million EVs by 2030 while making their offerings more affordable.

“While we believe EVs will become cheaper over time,” said the 5-star analyst, “the target of 20MM seems unlikely given the production requirements it would entail over the next 8-9 years.”

Assuming 100 to 120 million “light vehicles” are produced per year, this would equate to a 15-20% share of the global light vehicle market, a feat Gill is “skeptical” Tesla has the resources for. has.

With a current “production base” of 1 million vehicles and the potential to add another 1 million soon with the Giga Texas and Giga Berlin plants, Tesla would need an additional 18 million in capacity to achieve this goal. Assuming a capacity of 500,000 vehicles in each factory, an additional 36 gigafactories would be needed to reach the target.

With work underway, Musk has suggested that capacity at Giga CA and Giga NV could be increased by 50%. Still, with a capacity of 750,000 vehicles, Tesla would require 24 new Gigafactories at a CAPEX of approximately $125 billion, over a period of approximately 8 years, which equates to 3 per year, more than the current 2 additions per year, a effort Musk himself admits “is challenging.”

“In light of ever-increasing competition from other automotive OEMs with EVs, these goals seem even more difficult,” the analyst summed up.

And while Gill admits momentum is on the company’s side after its latest quarterly deliveries “beat expectations,” given the stock’s valuation, the analyst remains cautious on anything Tesla-related.

Accordingly, Gill reiterated an Underperform (ie sell) rating, without suggesting a fixed price target. (To view Gill’s track record, click here)

A look at the breakdown of the consensus doesn’t inspire much confidence either. The Hold consensus rating of TSLA stocks is based on 12 buy versus 7 hold and sell, each. Over the next 12 months, stocks are expected to lose ~15% of their value, given the average price target of $691.71. (See TSLA Stock Analysis)

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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.