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Tesla Is Miles Ahead of the Competition, Says Analyst

·2 min read

If you really want to explore the inner workings of a car company, there can be no better way than to get on the factory floor. That’s just what Canaccord's George Gianarikas did when trying to see under the hood of Tesla (TSLA).

The analyst took a tour of the Fremont factory and was “mesmerized by the factory's chaotic symphony and employee morale.”

And given its limited size compared to the company’s other locations, Tesla’s ability to “push the boundaries” of what its first location can produce has left Gianarikas singing the EV leader’s praises.

“While macroeconomic factors and recent price increases can certainly impact order rates, we estimate Tesla’s EV momentum and competitive lead - from manufacturing, to materials procurement, to autonomy - is secured for some time,” the analyst further said. “With additional offerings in solar, energy storage, and more to come, Tesla remains the sustainability behemoth.”

Gianarikas had already previously argued that what sets Tesla apart from its tech peers and other auto OEMs is its “manufacturing proficiency.” Tesla is years ahead of its rivals with regards to “working out idiosyncrasies in building EVs versus ICE while managing a new supply chain reality.”

And Tesla keeps on pushing the envelope; last quarter, Fremont’s annual capacity was boosted from 600,000 to 650,000, which makes it the U.S.’s highest producing car manufacturing facility.

At the same time, the cost to produce a vehicle has gone in the opposite direction; since 2017, cost per vehicle made has dropped by ~57%. “Bear in mind that the cost of the battery pack has only declined marginally during that period,” notes the analyst, “making this improvement mostly a function of enhanced design and process.”

Furthermore, with the deployment of the robotaxi platform over the coming years, Gianarikas anticipates that manufacturing and process costs will come down even more.

You can also expect a much bigger production output in the years ahead. During last week’s shareholder meeting, CEO Elon Musk said he hopes to build between 10-12 factories with each facility boasting a production capacity of 1.5-2 million vehicles – amounting to around 20 million in total annual vehicle capacity. Expect a new site to be announced by the end of the year.

All told, Gianarikas rates Tesla shares a Buy, while raising his price target from $815 to $881. (To watch Gianarikas’ track record, click here)

Overall, the Street’s take on Tesla presents something of a conundrum. The stock has a Moderate Buy consensus rating, based on 18 Buys, 6 Holds and 7 Sells. However, the $873.97 average price target implies shares will stay range bound for the foreseeable future. (See TSLA stock forecast on TipRanks)

To find good ideas for EV stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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