Credit Suisse analyst Dan Levy increased his price target for
stock to $ 400 from $ 280 on Wednesday, a 40% jump that works to more than $ 100 billion in additional market value. His reasoning is simple: batteries.
Tesla (ticker: TSLA) – which currently has a market value of more than $ 418 billion – will host its highly anticipated September 22nd battery technology event. Investors expect updates on battery capacity, reliability, range and technology. Several bullish analysts, such as Levy, see Tesla eventually launch the third part of its so-called master plan, which could make the company a supplier of batteries and battery technology to the electric car industry.
“We expect Battery Day to effectively be Master Plan Part 3,” Levy wrote in a research report.
Tesla’s master plan 1 was written by CEO Elon Musk in 2006. His plan was to build a sports car and then use that money to build an affordable electric vehicle: the Model S. Then use the money earned from the Model S to build a smoother more affordable electric car: Model 3.
All these goals have since been reached.
Musk unveiled the Masterplan 2, or “Part Deux,” as he called it, in 2016. This plan focused on photovoltaic systems and battery storage while expanding the vehicle’s range. Musk also talked about autonomous driving and robot taxis – allowing “your car to make money for you when you don’t use them.”
Some of these goals, like full self-driving, are still going on.
Levy believes that Masterplan 3 is about the batteries. According to the analyst, Tesla has the capacity to make approximately 63 gigawatt hours of batteries per year. For example, a Tesla vehicle may come with a 100 kilowatt-hour battery pack. This means that Tesla’s existing capacity can support around 630,000 vehicles a year. (Giga is billions and kilograms are a thousand. Tesla has 63 billion watt hours of battery production capacity, and a Tesla comes with an approximately 100,000 watt hour battery pack.)
Along the way, Levy sees Tesla announce plans for up to 2,000 gigawatt-hours of capacity, more than 30 times the day’s installed base. “We are awaiting color at the time of this capacity expansion, but we can imagine that Tesla is likely to plan to achieve this capacity in the next 15 years. [to] 20 years, ”he writes.
More battery capacity would enable Tesla to build its business of storing batteries in residential and user-friendliness. It would also allow Tesla to sell batteries to other automakers. “We have doubts about Tesla as a supplier to others,” Levy writes. “However, Elon Musk recently tweeted the interest in serving as a supplier to others.”
Despite the price increase, he still estimates a share equivalent to Hold. His “blue sky” scenario estimates Tesla at $ 630 per tonne. Share, or more than $ 560 billion.
The average analytical price target for the Tesla stock is around $ 300 per share. Share, up from approx. $ 60 in early 2020. The stock has risen about 432% year-on-year to a recent $ 445. That is far more than the comparable return of
Dow Jones industrial average
over the same span. Tesla’s gains have made it the world’s most valuable automaker by a wide margin.
Write to Al Root at firstname.lastname@example.org