Tesla Model Y at the Tesla Gigafactory during an open day. In Grünheide, east of Berlin, the first cars should roll off the assembly line at the end of 2021.
Patrick Plus | photo union | Getty Images
According to Wedbush analyst Dan Ives, a “significant overhang” on Tesla shares was cleared after German authorities said the automaker could begin production at a new plant in Berlin.
A conditional license for car and battery factories in Brandenburg was expected after several months of delays. Tesla had intended to start producing cars by early summer 2021, but the Covid pandemic, supply chain complications and clashes with environmentalists have slowed its progress.
Ives, Tesla’s notorious “bull” who expects the stock to rise, said Sunday in a note to investors that Berlin’s Gigafactory” is of paramount importance to Tesla and its share price. Tesla’s market capitalization topped $1 trillion for the first time last October., but since then, it has been gradually falling, and it is currently less than $850 billion.
“The bureaucratic red tape and headaches associated with the delays/controversies surrounding the opening of this flagship European plant have been frustrating for investors watching developments as many on the street doubted Giga Berlin would ever actually open,” Ives wrote.
“We cannot stress the manufacturing importance of Giga Berlin to the overall success of Tesla’s presence in Europe and worldwide, as the current logistics of the Rubik’s Cube of car production in China at the Giga Shanghai plant and delivery to customers across Europe has not been a sustainable trend,” he added. .
Tesla sees the Berlin plant eventually producing up to 500,000 vehicles a year.
Ives said the company’s Model Y is likely to be “in the spotlight” at the plant over the next 12 to 18 months.
Ives said the Model Y and some Model 3 release delays in different parts of the world are currently five to six months, noting that Tesla’s Austin, and now Berlin, factories should help address these issues and eliminate bottlenecks in production.
Wedbush believes Tesla will increase annual sales from 1 million units in 2021 to 2 million in 2022.
Ives has a price target for Tesla stock of $1,400, nearly 70% higher than Friday’s closing price of $838.
– Additional reporting by Michael Weiland and Laura Kolodny.