A Tesla super charging station
Andrew Caballero-Reynolds/AFP via Getty Images
Tesla revolutionized electric vehicles, making them popular for the masses and pushing traditional automakers to follow its lead. Now the company might be revolutionizing manufacturing, building better cars more efficiently.
If it succeeds, the lead Tesla (ticker: TSLA) has over the competition will expand.
Morgan Stanley analyst Adam Jonas raised his price target on Tesla to $1,200 a share from $900. To get there, Jonas now assumes Tesla will be making about 8 million vehicles a year by 2030, up from a prior estimate of about 6 million.
Jonas said recently in a CNBC interview that every million units of 2030 sales is worth roughly $150 to $200 to his price target. Jonas’ move on Sunday is roughly consistent with that math.
He sees Tesla selling more cars partly because the company is getting better at building them. Jonas cited the “giga press,” which is essentially a giant machine that die-casts a chassis from a single piece of molten aluminum. It’s like making a die-cast Hot-Wheels car children are familiar with—but at a much bigger scale.
“To be frank, we’re trying to make the car like you’d make a toy,” said CEO Elon Musk on the company’s third-quarter earnings conference call last year. “If you had a toy model car, how would—and then it’s got to be real cheap and look great—how would you make that? You’ll cast it … It would be absurd to make it up of tiny little pieces of stamp metal joined in complex ways.”
“The big picture here is Tesla has the opportunity to completely reinvent the car manufacturing for vehicle production and factories,” wrote Jonas. He said the coming year will be big for Tesla as it brings on new giga press technology and two new manufacturing plants in Texas and Germany.
Jonas is a Tesla bull, but his is the 12th price target at or north of $1,000 a share. Anything more than $1,000 values Tesla at north of $1 trillion. Tesla has about 1 billion shares outstanding making the math easy.
The bulls see a revolution. The bears aren’t so sure. The bottom dozen price targets value Tesla at about $360 a share. That still makes Tesla worth more than Toyota Motor (TM), but it isn’t anywhere close to the almost $910 a share where Tesla closed on Friday.
The bullish call has investors energized. Tesla stock was up 4.4% to $948.69, which would be an all-time high, in premarket trading following the bullish call. Dow Jones Industrial Average futures were flat, while S&P 500 futures rose about 0.1%.
Tesla stock has been on quite a run following strong earnings and delivery futures. Coming into Monday, shares have jumped about 40% over the past three months.
Write to Al Root at [email protected]
