By Michael Elkins
Electric vehicle maker, Tesla (NASDAQ:TSLA) is trading up in pre-market on Tuesday following a note by a Goldman Sachs analyst. The analyst reiterated a Buy rating and $333.33 price target on TSLA after meeting with the company’s VP of Investor Relations, Martin Viecha.
Tesla believes that consumers will increasingly move toward EVs, even as it is too soon to quantify the effects of the newly signed Inflation Reduction Act (IRA). The analyst believes that consumers will be attracted to electric vehicles in the same way they were attracted towards other technology inflections (e.g. CRT to LCD TVs, and feature phones to smartphones). However, the EV industry could be supply-constrained over the intermediate term as new battery/component supply and assembly take time to ramp up.
Software and services, especially FSD, remain a key focus for the company as they continue to develop software and services to monetize the growing installed base of connected vehicles. Tesla believes FSD is one of the most important efforts in this category, and the company is targeting a wide release of its beta software in North America this year.
The analyst wrote in his note that he believes that "Tesla, given its leadership position in EVs (including its vertical integration and tight coupling of hardware and software, as well as its ecosystem of charging stations and brand), and its focus on clean transportation more broadly (given its solar and storage businesses) is well positioned to capitalize on the long-term shift to EVs. We expect Tesla to expand margins in the intermediate term as it ramps the important Model Y product as well as new factories in Berlin, Germany and Austin, Texas, and in the long-term as it increases its mix of software revenue."
Tesla is up 0.88% in pre-market trading on Tuesday.