A Wall Street analyst who visited Gigafactory Berlin with management says Tesla is facing “unprecedented demand”. There have been many indications in the past few months that Tesla is facing strong demand. Especially as gas prices went surging to a record high in the US this year. Tesla recently stopped taking orders for certain models, which will be open again for orders later by next year.
Last week, Tesla held an event for analysts at Gigafactory Berlin, and Pierre Ferragu of New Street Research participated. In a note to clients, Ferragu noted that he sees Tesla facing “unprecedented demand”. “Tesla is facing unprecedented demand. Everybody I know at Tesla and with whom I could discuss that topic agrees that demand is way above what hopes were a few years ago. Electric cars are so popular that for Tesla and their competitors, market shares will mostly be dictated by their ability to ramp volumes.”
The analyst came out of the visit, impressed by the efficiency of Gigafactory Berlin. “Compared to Fremont, Berlin is visibly much more efficient. Logistics inside the factory are much simpler, eased by docks surrounding the fab from all sides and ensuring parts come in at the right place in the manufacturing chain. The single manufacturing line is designed for a cycle time of 45 seconds and will deliver 10,000 cars per week at full capacity. (On a side note, it takes just above 5 full days non-stop to do 10,000 cars at 45 seconds per car, so this target accounts for a healthy 25% downtime.) Most importantly, cars are manufactured today with a rear casting, and will shift to the rear and front casting as soon as the 4680 structural battery packs will be available.”
Increase in production
Long term, Ferragu even sees a case for Tesla being worth $10 trillion by 2030, but that’s based on the automaker achieving its goal to produce 20 million electric vehicles per year by then. For comparison, that’s about four times Apple’s current valuation. Ferragu has a price target of $530 on Tesla’s stock, which represents a significant upside on the current value of $275 a share.
Last year, Tesla reported that it delivered 936,000 cars, an 87 percent increase from the year before, despite the computer chip shortage that has disrupted auto production around the world. In the fourth quarter alone, the company delivered more than 308,000 vehicles, a 71 percent increase from the quarter a year earlier. The overwhelming share of the deliveries was of the Model 3 sedan and the Model Y hatchback. Wall Street analysts had been expecting deliveries of about 266,000 cars in the fourth quarter, and about 855,000 for that year.