Wedbush Securities analysts published a research update on Tesla Inc (NASDAQ:TSLA), saying that based on the current demand trajectory for the company’s electric vehicles they are seeing so far in the March quarter, “we believe unit deliveries are trending well ahead of Street expectations” and Tesla “could now be on a 2 million unit run-rate exiting 2022”.
“While China will be a key growth driver, we believe demand is rapidly building for Tesla's Model Y with 2022 so far looking like another ‘breakout year’ for Tesla and the EV (electric vehicle) industry,” the analysts wrote.
“While logistical hurdles will be a near-term cost burden, we importantly believe Tesla has the potential to further expand its auto GM and profitability profile over the next 12 to 18 months especially with more higher-margin cars being sold and produced in China,” they added.
READ: Tesla battles to reopen Shanghai factory amid China's growing COVID lockdowns
The Wedbush analysts also called Tesla's Berlin factory a ‘game changer’ for the company’s supply issues, saying it views Giga Berlin as a “major competitive advantage”, establishing “a major beachhead” for Tesla in Europe with potential to expand this factory to production of about 500,000 vehicles annually with Model Y front and center over the coming 12 to 18 months.
They also noted the opening of its Austin, Texas factory next month will be “another defining event for Tesla as the company further flexes its EV manufacturing muscles while other EV competitors struggle to get factories off the ground”.
“In a nutshell, Tesla has the high class problem of demand currently outstripping supply for both Model Y and Model 3 around the globe with supply issues the biggest constraint for Musk & Co. and now help is on the way with the launch of the Berlin and Austin flagship factories,” they said.
The analysts have maintained their ‘Outperform’ rating and $1,400 price target on Tesla shares, saying they believe Tesla's stock has been “way oversold” over the past few months along with the risk-off mentality among tech investors.
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