Tesla: Key Berlin Manufacturing Hub Will Address Capacity Issues

·2 min read

If you would like to get a glimpse of the day-to-day operations at the world’s most prominent EV maker, you could make your way to Berlin in October. Tesla (TSLA) will open its doors for the general public for a tour of the electric vehicle and battery plant, although it would be handy if you’re a local, as residents of Brandenburg and Berlin will be given priority.

Founder and CEO Elon Musk paid a visit to the facility last Friday and has earmarked October for the beginning of vehicle production at the Berlin Gigafactory. Although that is still dependent on getting the go ahead from Brandenburg's environmental authorities. Permit delays, environmental activists’ protestations, and hibernating sand lizards on the proposed site – yes, that’s right - have all been reasons for delaying the previously mooted July 12 opening.

As capacity and supply currently remain the biggest hurdles for vehicle demand, Wedbush’ Daniel Ives considers the Berlin factory’s – and soon to open Austin facility –“ramping” of capacity as “another notch on the belt for Musk & Co. to drive the broader EV vision globally.”

“While further delays could still happen given the red tape involved, we view this news as a positive step on expanding Tesla's broader manufacturing capacity globally,” the 5-star analyst further said. “Right now many Model 3's/Y's produced in China are being exported to Europe in a logistical nightmare that is not sustainable and thus pushing back delivery times for customers throughout the region.”

Ives sees both the Berlin and Austin factories as major manufacturing hubs that will have a big part to play in the “long-term Tesla EV story.” Further down the line, Ives thinks Tesla will be able to manufacture millions of EVs annually. This is far more the than the roughly 870,000-900,000 vehicles Tesla expects to produce this year.

To this end, Ives maintains an Outperform (i.e. Buy) rating on Tesla stock along with a $1,000 price target. At current levels, this target suggests ~46% upside for the year ahead. (To watch Ives’ track record, click here)

Ive is one of the Street’s most fervent Tesla bulls, and his colleagues’ average price target is a far more modest $709.61, suggesting shares will barely move over the next 12 months. As usual, this stock generates a wide range of opinions on Wall Street; based on 13 Buys, 7 Holds and 6 Sells, the analyst consensus rates Tesla a Moderate Buy. (See TSLA stock analysis on TipRanks)

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