Goldman Sachs said in a research report on July 21 that Tesla remains the leader in the electric vehicle market with ongoing increases in revenue and profits. They also set a target stock price of $860 for the next 12 months. As of yesterday’s close, Tesla’s current stock price is $655.
On Wednesday, the European Commission announced plans to stop the sale of polluting vehicles. After the EU proposed to stop the sale of petrol and hybrid vehicles by 2035, Goldman Sachs released a research report forecasting a 20% increase in electric vehicle sales within the next 20 years. Goldman Sachs also estimates that electric vehicle sales will increase from 48% to 56% by 2040.
Goldman Sachs predicts that the SUV market segment is continually expanding and that electric crossovers have relatively low costs but high price points. The Tesla Model Y will become a key product for revenue growth and profit expansion. Elon Musk himself has previously stated that the Model Y will become the best-selling pure electric SUV until 2022.
In order to capture the European electric vehicle market, Tesla established their third Super Factory located in Berlin, Germany, as early as 2019. Tesla Berlin Factory originally planned to complete construction and start production as fast as its Shanghai Factory, but after obtaining approval in November 2019, various obstacles delayed the production of the Model Y, which was originally scheduled for this month, to the end of this year. The revised documents of Tesla Berlin Factory also revealed the production details of the 4680 battery, which will be crucial to further improve competitiveness.
Today, the first batch of ES8 for delivery to Norwegian customers has been officially shipped and is expected to open reservations and deliveries in September this year. A complete operational system will also be established in Norway. Currently, new energy vehicles account for about 15% of total car sales in Europe. Under increasingly strict emission regulations, the blue ocean market of electric vehicles will continue to grow.
Another major driver supporting Tesla’s continued profit expansion is the Chinese market. Last month, Tesla sold 17,017 Model 3s and 11,486 Model Ys in China, ranking second and third respectively in total sales of new energy vehicles.
There are two reasons for Tesla’s sales expansion, namely the increase in production capacity and the localization of its supply chain to reduce operational costs. Tesla has adopted low-priced lithium iron phosphate batteries to continuously lower the prices of Model 3 and Model Y. In addition, Model Y exported from the Shanghai factory will be delivered to Europe in August. The Shanghai factory has contributed significantly to Tesla’s position in the European market, and increasing exports in the second half of this year can help Model 3/Y obtain better sales figures in the European market.
Not only that, Goldman Sachs has expressed great expectations for the Chinese new energy vehicle market. The strong sales of new energy vehicles in the Chinese market make battery costs lower. In the past, the development of new energy vehicles in China mainly relied on the government to drive it. China has established a sound system and policy, and both subsidies and dual credit policies are more actively driven by the country.
🔗 Source: TESLARATI
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.