Why This Tesla Analyst Sees Giga Texas Serving the ‘Heart and Lungs of Future Electric Vehicle Production’

Tesla Inc. TSLA held the grand opening of its Giga Texas on Thursday night, with the invitational festival named Cyber ​​Rodeo attended by around 15,000 people.

The Tesla analyst: Wedbush analyst Daniel Ives maintained an outperform rating and $1,400 price target for Tesla shares.

The Tesla Thesis: Tesla’s fifth Giga, located in Travis County, Texas, will be a game changer in electric vehicle production for the company in the United States, analyst Ives said in a note. Austin will take over from Fremont as Tesla’s main hub of operations for the next few years, he added.

Tesla CEO Elon Musk estimated the number of people employed at the plant at around 10,000 and confirmed that cybertruck production at the plant will begin in 2023, the analyst noted.

The Cybertruck, along with the Semi, Model 3 and Model Y, will be “front and center” over the next 12 to 18 months, he added.

The Texas Giga, estimated to cost $1 billion, is located near Austin Airport in Texas, the analyst noted. The company aims to have an annual Model Y production capacity of around 500,000 units at the plant, he added.

Related Link: As Two New Gigas Go Live, Here’s a Look at the $1,000 Worth Invested in Tesla When Giga Shanghai Opens Today

As Tesla grapples with the problem of demand exceeding supply, the Giga openings in Austin and Berlin will help address Tesla’s production bottlenecks around the world, the analyst said. The company, Ives noted, will likely have a production capacity of around 2 million units per year by the end of 2022. This is a 100% increase from the production rate of 1 million currently observed, he added.

China’s “zero Covid” policy is causing shutdowns in Shanghai for Tesla and remains a worrying trend if it continues, the analyst said. With Austin and Berlin now in business and thriving, the company will likely continue to “flex its distribution muscles in the electric vehicle landscape” even as other automakers struggle, he added.

“In a nutshell, last night was a significant achievement for Tesla with Austin the ‘heart and lungs of future American EV production’ with Fremont the key punch casting a shadow over other EV players. in this arms race,” Ives mentioned.

TSLA Price Action: Tesla shares were down 2.20% at $1,034.18 on Friday at the time of publication.

Related Link: Why Tesla Analysts Ignore First Quarter Deliveries, Remain Bullish on EV Stock

Photo: Courtesy of Tesla Inc.

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