By Michael Elkins
Goldman Sachs reiterated a Buy rating and $200.00 price target on Tesla Inc (NASDAQ:TSLA) ahead of the electric vehicle maker’s investor day on March 1st in Austin, Texas. Analysts expect the company to primarily focus on the Energy segment, with CEO Elon Musk planning to present Master Plan 3 and discuss what’s needed for the world to transition to sustainable energy. They also expect topics will include Full Self Driving (FSD) and the Optimus robot and financial drivers (including EBIT margins/opex leverage, and capital allocation).
Goldman Sachs doesn’t think the Optimus robot will be a key focus for most institutional investors. The analysts think investors will be looking to better understand any progress since Tesla last showcased its potential. They expect only a limited amount of time on Optimus at investor day given that this was the primary focus at the AI day in October 2022.
Goldman analysts wrote in a note, “We expect the transition to sustainable energy and the outlook for Tesla’s Energy segment to be one of the most prominent parts of the event (with Elon Musk stating that he will present Master Plan 3 on this topic). Recall that Tesla has said that the TAM for energy could be larger than automotive, and the company is in the process of ramping a 40 GWh ‘Megafactory’ in Lathrop California (roughly 10X its prior capacity) for its utility scale Megapack product. Recall that at Battery Day in 2020, Tesla commented that the world needs roughly 10 terawatt-hours a year of battery production to transition the global fleet to electric vehicles, and 20-25 terawatt-hours per year to transition the world to renewable energy. Tesla recently announced it plans to build 4680 batteries in Nevada, which would be a step toward that goal.”
Tesla also announced on 2/15/23 that it will be opening up parts of its North America charging network to non-Tesla vehicles. Tesla has also been opening up parts of its network in Europe. The analysts see this as a strategic positive and could drive incremental EPS.
They believe that Tesla could comment on how it will maintain strong EBIT margins, but they don’t expect Tesla to provide a formal EBIT margin target. Tesla also said it would discuss capital allocation when it announced it would hold the investor day, and Goldman Sachs believes this will include capex and a potential share buyback.
Shares of TSLA are down 0.92% in premarket trading on Friday.