Tesla, Inc.(NASDAQ: TSLA) stock failed to extend the gains from Monday, when it hit a $1-trillion market cap for the first time.
The Tesla Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating on Tesla with a $1,100 price target. The analyst's bull case price target is $1,500.
The Tesla Takeaways:Tesla is a disruptive technology player and not an automotive stock, given its stronghold on the $5-trillion EV market over the next decade, Ives said in a note.
The Hertz Global Holdings, Inc.(PNK: HTZZ) deal, the analyst said, will be viewed as a tipping point for the EV industry, as the 100,000 Model 3 EV supply deal valued at over $4 billion speaks to more mainstream adoption for EVs, the analyst said.
"We believe this is the biggest transformation to the auto industry since the 1950's with more consumers heading down the EV path over the coming years."
For Tesla, two key things need to occur to reach its next gear of growth/margins, he said.
Firstly, Tesla has to alleviate the demand-supply imbalance it is facing, Ives said.
Tesla is facing a "high class" problem of demand outstripping supply, especially for Model Ys and Model 3s, across the globe, the analyst said.
The key to alleviating these issues, he said, is centered around the Giga openings in Austin and Berlin, which Ives said will help tackle the bottlenecks of production for Tesla globally.
By the end of 2022, Tesla will have overall capacity of over 2 million units annually, up from roughly 1 million now, the analyst said.
Secondly, China needs to keep rolling for Tesla, especially after it navigated through PR/safety issues earlier this year, he said.
For 2022, Wedbush estimates China will represent over 40% of global deliveries, underlining the importance of the region to the longer-term bull thesis for this story. China is worth $300 per share to the Tesla story, Ives said.
TSLA Price Action: On Tuesday, Tesla shares fell 0.63% to $1,018.43.
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