Tesla impressed Deutsche Bank analysts with the Gigafactory Texas’ exceptional production capacity.
The Musk-led automaker toured the German global banking and financial services firm’s analysts in the electric vehicle production plant, gaining their endorsement.
However, the positive aspect comes with a caveat that could sour the company’s near-term prospects.
The situation at the Giga Texas
Deutsche Bank analyst Emmanuel Rosner was once again swayed with the Giga Texas, saying that it is “well designed and runs very efficiently,” Street Insider reports.
Rosner also pointed out that Tesla is currently cranking up the tooling for the highly awaited Cybertruck, which will certainly delight investors. In early March, Tesla increased its job postings related to Cybertruck production. In addition, parts for Cybetruck machines continue to arrive at the plant.
Apart from that, Tesla has also been striving to expand its production and manufacturing operations in Giga Texas. Essentially, these initiatives will aid the automaker’s total output to soar to million units and enable cost savings in the long run.
That said, the firm restated a Buy rating on Tesla and retained its 12-month price threshold on the stock at $200.00 following the said production plant tour.
However, the analysts also pointed out some drawbacks. As mentioned, Rosner does observe promising indicators that might result in cost reductions in Tesla’s next manufacturing endeavors.
The near-term prognosis, though, appears to suggest that Tesla may need “to take additional price cuts in a weakening environment, which could put further pressure on earnings.”
In hindsight, Tesla implemented significant price cuts on its electric vehicle offerings in the first quarter of 2023. In effect, the automaker lost some of its auto gross margin, bringing the figure below 20%.
Nonetheless, Tesla insisted that the gross decline was “manageable.” That said, the automaker believes its profits will rebound as manufacturing keeps expanding.
“Mid-term, Tesla confirmed that it is working on developing two new models on its next-gen platform and represent its highest priority at present. We are also encouraged by the targeting combined unit volume of 5 million and we remain bullish on the opportunity presented within the next-gen platform.
Deutsche Bank analyst Emmanuel Rosner
See Also:
- Tesla employees at Giga Texas expands by 300% in 2022
- Tesla applies for Giga Texas expansion worth $776 million
- Tesla boosts job postings for Cybertruck production in Giga Texas
- Tesla receives Sacmi machines at the Giga Texas cathode facility
- Tesla Cybertruck Die Casting Molds Arrive at Giga Texas, per Report
Notably, Tesla Giga Texas employees expanded by 300% in 2022, demonstrating unstoppable growth throughout its global operations. In early January, Tesla also applied for Giga Texas expansion worth $776 million.
All that said, it would not be surprising if Giga Texas will soon surpass Giga Shanghai as Tesla’s primary source of output.
