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Tesla (TSLA) Reaches One Millionth Car With Model Y's Launch

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Zacks Equity Research
·3 min read
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Tesla, Inc. TSLA has reached an important milestone with the manufacture of its one millionth car — a Tesla Model Y. This is in sync with the company’s goal of manufacturing one million electric vehicles (EV) as well as launching the Model Y by 2020. Despite it taking 17 years from its inception to complete the task, the company has shown that its innovation for electric automobiles is enough to attract buyers from around the globe to a battery-powered platform that was all but ignored in the face of traditional combustion engines.

The highly-anticipated Model Y is a smaller, compact and a more reasonable version of Model X. Margin expectations for Model Y are higher than its popular Model 3. While production costs are expected to be same for both, Model Y is priced higher than Model 3 due to extra room, larger size and a hatchback. With a range of more than 300 miles per charge and seating capacity of 7 adults, Model Y will be offered in three variants. The Rear-Wheel Drive Long Range version will retail at $48,000. The Dual Motor All-Wheel Drive Long Range and the Performance version will be sold at $52,000 and $61,000, respectively.

Although EVs occupy a small portion of the global automobile market, Tesla has acquired a substantial market share within this niche segment. With Model 3 sedan being its flagship vehicle, Tesla has established itself as a leader in the EV segment. Rising Model 3 delivery, which forms a major chunk of the automaker’s overall deliveries, is driving the company’s top line. Revenues are likely to rise further as it expects to make good progress on Model 3, going forward. Strong performance and impressive design of the firm’s products are boosting sales volumes.

In 2019, Tesla delivered 367,500 vehicles, up 50% year over year. For 2020, the company expects vehicle deliveries to exceed 500,000 units. Higher volumes will enable Tesla to achieve cost and production efficiencies, which will fuel margins. Along with increasing automotive revenues, the firm’s energy generation and storage revenues are also boosting Tesla’s prospects. Notably, solar and storage deployments will be up at least 50% in 2020. It also plans to roll out Tesla’s Semi truck, Roadster and Model S Plaid in the ongoing year.

Zacks Rank & Stocks to Consider

Tesla currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include LCI Industries LCII, SPX Corporation SPXC and Adient PLC ADNT. While LCI sports a Zacks Rank #1 (Strong Buy), SPX and Adient carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

LCI has an estimated earnings growth rate of 20.72% for the ongoing year. The company’s shares have gained 16.7% in a year’s time.

SPX has an expected earnings growth rate of 6.52% for 2020. The stock has rallied 16.6% in the past year.

Adient has a projected earnings growth rate of 17.79% for the current year. The company’s shares have appreciated 13.7% in the past year.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

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Tesla, Inc. (TSLA) : Free Stock Analysis Report
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