Tesla’s Stock Upgraded On “Strong Competitive Advantage”

Despite the current economic downturn and a “tough quarter” for Tesla, according to Elon Musk, an analyst recently upgraded the company’s stock, citing “favorable” positioning. The analyst claims that Tesla is well set up for both the short- and long-term markets, mainly due to its early focus on vertical integration.

RBC Capital’s Joseph Spak upgraded Tesla’s stock to do better, saying the electric carmaker has a “more favorable setup in the short term,” according to MarketWatch. Spak also noted that Tesla’s vertically integrated model will give it a competitive advantage in the medium and short term.

For the second quarter, most analysts expect Tesla to deliver about 279,000 units, Spak says, with industry buy-side estimates as low as 250,000 units. Spak predicts that Tesla will supply 249,000 units, with room for an upside to the estimate if Tesla’s Gigafactory Shanghai is fully operational again, as described in some reports.

In addition to deliveries, Spak says Tesla could expect to see a margin upward in the second quarter and in the second half, despite expectations of delivery declines from the first to the second quarter. With price increases, Tesla could see an increase of up to 3 percent in average sales prices, “given the price increases that Tesla has taken a while back but has not been able to realize as they have worked through their backlog. “

To be fair, most car manufacturers have raised their prices. And while the move may not benefit buyers, it could help Tesla cope through the current economic period, as inflation ravages commodities.

Tesla raises prices to address supply chain challenges. Youtube: Reuters


However, demand for Tesla’s vehicles is still high. At the time of writing, US Tesla orders of Model 3 RWD and AWD Long Range variants have an estimated delivery on September to December, while the Model Y Long Range variant has an estimated delivery from January to April 2023. Both Model 3 and Model Y Performance models come much faster, with delivery estimates of June to August and August to October, respectively.

Tesla’s supply chain agreements may have helped mitigate the effects of inflation hitting commodities, with Spak emphasizing this as part of the key to its favorable industry positioning.

“While TSLAs are pretty secretive about the agreements they have made for the supply of raw materials, we believe they have done more than other OEMs by talking to contacts,” Spak said. “The company’s early focus on vertical integration (not only batteries / raw materials, but also engines, semi-machines, software) is likely to pay off.”

Originally published on EVANNEX.
By Zachary Visconti


 

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