On Thursday, Deutsche Bank raised the price target for Tesla (NASDAQ:TSLA) shares to $136 from $123, while keeping a Hold rating on the stock.
The adjustment follows Tesla's first-quarter results, which sparked a positive market response. The report revealed that Tesla is not abandoning the production of more affordable consumer models and is not solely depending on the future success of its Robotaxi concept.
The bank's analyst noted Tesla's decision to halt the addition of new plants or capacity for the time being. The company also announced it would not launch its next consumer vehicles using the cost-effective "unboxed" production process. Instead, Tesla plans to combine existing production lines with elements of next-generation technology to expedite the manufacturing of more affordable vehicles, potentially as soon as the first half of 2025.
This strategic move is seen as a practical response to the challenging demand environment for electric vehicles and the necessity to manage capital expenditures, especially with significant investments required for AI and autonomous technologies. The analyst views this development as potentially positive compared to previous expectations but also acknowledges the substantial execution risks associated with the aggressive timeline.
Furthermore, questions remain regarding the details and costs associated with the new vehicles. There is also a risk of cannibalization of the Model 3 and Model Y sales if the differentiation between the models is minimal. Additionally, the production volume of the more affordable vehicle lineup is constrained by existing capacity, which may be insufficient to significantly impact earnings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.