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What Tesla's move to open superchargers means

In this article:
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  • TSLA
  • HRI
  • HTZZ
  • NIO

Wedbush's Dan Ives on Tesla's move to open up its supercharging network.

Video Transcript

- Are you suffering from [? range ?] anxiety? If you're not a Tesla owner and you live in the Netherlands, soon you'll be able to use Tesla's extensive supercharger network on your BMW-- BMW or Mercedes EV. Here to talk about all things Tesla and the EV world is Wedbush Securities Dan Ives.

You are the managing director there and we thank you for joining us here. Let's talk about this story because this is all about Tesla going mainstream. This is something that I've heard some other owners, kind of pine for, I guess you could say. This is only a rollout program or test program in the Netherlands, but how big is this for Tesla?

DAN IVES: Well, I think it's just the tip of the sphere. I think they're going to be doing this more and more because Musk and Tesla recognize, the supercharger obviously they've built that mode. But to really see more widespread EV adoption as part of this green tidal wave, that's going to be a key.

So them opening this up, now I view is bullish for the space. I think it's bullish for the sector. And I think it's something we're going to see more and more over the coming, call it 12 to 18 months globally.

- And we were just talking over the break. This is an issue that arose a couple of weeks ago but you know, with Tesla's stock soaring high like this and as you said, on a split adjusted basis, it would have topped 5,000. I think that even bested Cathie Wood's target from years ago. A lot of-- a lot of times, any positive news comes out from Tesla like the Hertz deal, where they're going to buy 100,000 cars, there's this whole contingent on Twitter and elsewhere were they offer some competing thesis.

But as you've said, this is all part of the rollout plan of Tesla becoming a more mainstream automobile maker. This is what Ford and GM do. What are your thoughts here?

DAN IVES: Look, I think today in the US, 2% of automobiles are EV's. Within that goes to 10% by 25, 30% by 2030. I think the reason that Hertz deal is such a tipping point, we're seeing more and more mainstream adoption. That was key to what we saw in Hertz, both deals.

In the auto industry, though, there were always a saying, "There's never just one bulk deal," and that's what we're seeing play out. Now look, in terms of the haters continuing to hate. They hate it at 100. They hate it 5,500. I think if any of these haters were NFL scouts, they probably would have been super negative on Tom Brady coming out of 2000 draft.

- Well, who wants five Super Bowl titles? I don't even know if I might have low-balled that.

DAN IVES: Seven.

- But I've-- seven. That's-- that's very impressive, especially considering he is my age. I couldn't take those hits. I can tell you that. But I want to talk about some of the numbers, the delivery numbers that came out over the weekend for the month of October. Tesla, they-- they seem to be managing this supply chain crisis pretty well and you compare them with Nio, complete opposite story here.

DAN IVES: Yeah, I think [INAUDIBLE] have fun like in terms of what you're seeing. But also, remember when we talk about Nio in China, Tesla saw those headwinds earlier this year. Now those are talons and we're seeing demand outstrips supply pretty significantly globally, but even in China. And I think you're seeing some share gains, them really starting to gain back some of the momentum in China. China is the linchpin to the story. That'll be 40% of deliveries going into next year for Tesla.

You look at Nio. I continue to view them as gold standard. Love that name in terms of everything they're doing now. Relative to some of the supply chain issues that's hurting them. But I still think investors have that goldfish mentality. View this as transitory. It's part of this sort of green tidal wave playing out globally.

- What about the demand in Europe? We saw VW really-- it looked like they were going to overtake potentially Tesla earlier this year, but the demand for VW EVs have fallen off and Tesla's really remained and kept a large part of its share, maybe even grown. I haven't checked the last month or so. But how critical is China to that strategy?

I know that they import a lot of vehicles from China into Europe and then we have the Gigafactory in Germany and other places which continue to get built out. So you just give us an overview of the demand for EVs in Europe.

DAN IVES: Well, it's a great point. And I think a big part-- you hit on Hertz before-- but a big part of the story, Look WHAT'S happened in Berlin with Giga. Giga Berlin, that's going to give a major supply artery in Europe. Right now, they're making cars in China, shipping them to Europe.

So that-- that's something where in Europe, that's in our opinion, going to be a big growth driver going into the next few years. Giga Berlin is going to be key. And then, of course, what's happened in Austin, as well.

I mean, when you take a step back, you know, this is a company at right now, call it about million capacity in terms of units. A year from now, they'll be over 2 million. But I think it just shows now, they don't have a demand issue. That's actually a high class problem. They have a supply issue. That gets alleviated now with Berlin in Austin.

- Well, on-- then let's stick with the supply front. Is there going-- is there pent up demand right now for EVs across the world? The answer almost seems obviously yes because there are shortages of cars everywhere, but what's the horizon? What's the turning point? When can we see that?

DAN IVES: Well, I think there's a few turning points. I mean, one is that naturally, we are seeing-- what we're seeing in China is starting being mirrored now in Europe, as well as the US. And that's why you're seeing more and more EV automakers go after, you know, what I view as the biggest transformation to the auto industry since 1950's.

Now, when you look at gas prices where they are, especially globally. You look in Europe where they are and US. That's going to catalyze more and more, I think sales to EV and then the supercharger networks getting built out. The grid, it's carrot and the stick, but now the infrastructure starts to get built out.

And I think that-- this is just the start. It's not just going to be Tesla. It's going to be a star with like GM, Ford, and others that benefit. VW and Europe, as part of what we're seeing is a $5 trillion market over the next decade.

- And getting back to that Hertz deal, one of the items that stuck out to me are the subsidies. And government subsidies are going to play a big part in reducing the cost of some of these cars, the fleet. I'm just wondering, at what point do these disappear and how does that affect the competitiveness of the price point on these models?

DAN IVES: Well I think, they have disappeared, but now you'll see them getting ratcheted up and that's a big thing that's getting battled in the Beltway right now, especially if it's a union or non-union EV factory, but it's significant. It's all about, you know, from a consumer perspective, it's an apples to apples. What am I paying for an EV versus a traditional gasoline fueled car? Subsidies are key. Some of them, you could be getting upwards of 12-15,000.

That's going to make a big difference. And I think what we're going to see more and more, a year or two years from now, EVs are something it's not just going to be in California and some other states that we've seen it. I believe this is something not just domestically, but globally.

It's part of just a massive transformation that's just starting to play out. That's why Tesla is in the 1,500 bull case, stock continues to move higher. But it speaks to right now, which is the massive market that investors trying to play.

- Well, Dan, we always appreciate when you stop by. Dan Ives, Wedbush--