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5 Trillion Reasons To Be Bullish On Tesla

In the latest EV sector report, the EV kingpin, Tesla Inc. (NASDAQ:TSLA), has cemented its credentials as one of the few electric vehicle manufacturers ready to challenge the ICE hegemony. 

According to a report by the Korea Automotive Technology Institute (KAII), global EV sales have exceeded 3 million units in the first three quarters of 2021, a run rate that puts it on course to break 4 million units a year for the first time ever. 

BloombergNEF is even more optimistic and expects global sales of electric passenger vehicles this year to clock in at 5.6 million units, good for an impressive 8% of new vehicle sales.

Wedbush Securities forecasts that Tesla alone could grab up to 50% of the $5-trillion EV market in the coming years, with the rest of the manufacturers fighting over the remaining scraps. 

With that in mind, Wedbush analyst Daniel Ives maintains his “Outperform” rating, raising his price target on Tesla from $1,100 to $1,400 per share. But Ives “bull case” is $1,800.

While Tesla has been busy trying to corner the Chinese market–quite successfully–Wedbush estimates that from 2022 onwards, China will be worth $400 per share for Tesla. 

On a company basis, Tesla remains the most popular model after moving 625,624 units in the third quarter, 51% more than second-placed China’s SAIC Motor, which sold 413,037 units; Volkswagen 287,852 units; and China’s BYD Corp. (NYSE:BYD) with 189,751 units. 

Tesla has definitely established a strong head start on the competition in the EV market that ICE incumbents as well as newer pure-play EV upstarts will have a hard time catching up to.

Keep an Eye on China

Tesla stock rallied further Monday after Musk tweeted about the launch of the Model S Plaid in China for mid-2022. 

“Model S Plaid is sickkkk!!!!” Musk has tweeted.”

The $131,100 Model S Plaid features 1,020 horsepower, a 17-inch touchscreen, a steering yoke and has an estimated EPA-rated range of up to 390 miles.

China is the world’s largest car market, and it’s the key here, with Ives calling it the “linchpin to the overall bull thesis on Tesla”.

For Q3, Tesla’s China sales were almost half the volume of its U.S. sales … and climbing. 

Tesla reported $3.11 billion in EV sales in China for Q3–a figure that represents 48.5% of its $6.41 billion in U.S. sales for the same time period. It’s also more than a 41% increase over China sales a year ago. 

In January 2020, Tesla delivered its first locally manufactured EVs in China. This year, Tesla started delivering its second model to the Chinese straight from its gigafactory in Shanghai. The Model 3 and Model Y are now the top three EVs in terms of sales in China. 

And now it’s offering loans in China to spur more sales. Tesla’s financial products even include some with zero down payments. 

Profitability and Catalysts for 2022

For every quarter of 2021 so far, Tesla has managed to increase its profit margin, largely because of reduced costs and higher sales.

That momentum is expected…

Read More: 5 Trillion Reasons To Be Bullish On Tesla

2021-11-25 19:00:00

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