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Tesla has 'key advantage' over other automakers, analyst says

Tesla’s (TSLA) stock surged nearly 10% to a record high Monday, breaching $500 per share for the first time ever.

The sharp advance in the electric car-maker’s stock came in the wake of a bullish call from Oppenheimer analyst Colin Rusch, who bumped his price target on Tesla to $612 a share, up from $385 previously and representing one of the highest on Wall Street.

A primary tenet of Rusch’s bull thesis was rooted in his conviction that Tesla remains well ahead of its competitors in autonomous innovation.

Troves of information collected from hundreds of thousands of vehicles on the road have enabled Tesla to create a database for future developments in autonomy, Rusch said.

“They’ve got 600,000 cars on the road collecting data from all of their sensor suites, collecting what we consider ‘corner cases’ – you know, the odd lots, the unusual circumstances that a car might run into on the road,” Rusch told Yahoo Finance’s The Ticker on Monday. “And we think that data is, you know, going to help them redesign their autonomous system.”

Tesla has previously touted its use of data to improve existing features like Smart Summon, which CEO Elon Musk said in October had been used more than a million times.

“This really illustrates the value of having a massive fleet because it allows us to collect these corner cases and learn from them and use fleet learning and become rapidly better, just as Navigate on Autopilot did on the freeway,” Musk said during a call with analysts about Tesla’s third-quarter results in October. “This really is just the beginning as we collect more data and Autopilot and Full Self-Driving functionality gets better.”

Rusch, for his part, agreed with the benefits Tesla derived from scale.

“They have 600,000 cars versus the next competitor that’s between 600 to 1000 cars out there collecting data,” Rusch said. “We think that’s a key advantage.”

Tesla Inc CEO Elon Musk dances onstage during a delivery event for Tesla China-made Model 3 cars in Shanghai, China January 7, 2020. REUTERS/Aly Song
Tesla Inc CEO Elon Musk dances onstage during a delivery event for Tesla China-made Model 3 cars in Shanghai, China January 7, 2020. REUTERS/Aly Song

‘Existential threat’

Rusch also cited the speed at which Tesla developed its China Gigafactory as a factor in his bullish outlook on the stock.

“The first shovel going into the ground to first vehicle was less than a year. We think that’s put a lot of the automakers on notice for an existential threat, really not just from a technology perspective but from a manufacturing perspective,” Rusch said.

That expedited time – from breaking ground on a plot of land in Shanghai in January 2019 to delivering its first vehicles built in China to public customers earlier this month – marked a major turnaround from the production woes Tesla had endured a couple years prior at its earlier major factory in Fremont, California.

While auto sales overall in China have been slowing, analysts convened on the view that getting the factory online quickly was a major win for Tesla. And that milestone added to a batch of positive developments for the company: Just days before delivering its first car, Tesla reported record fourth-quarter 2019 deliveries of 112,000 vehicles, up 23% over the year prior.

“We think they’re actually learning from those mistakes and making some real changes to their processes,” Rusch said.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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