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- Tesla has faced a host of challenges in recent months.
- But one optimistic analyst who toured Tesla’s Fremont, California, plant and its Nevada Gigafactory in recent days is doubling down on his bull thesis.
- Wedbush analyst Dan Ives described his time at the factories to Markets Insider, and explained why he walked away feeling optimistic about the company’s direction.
- Watch Tesla trade in real-time.
Dan Ives really likes Tesla.
He and his fellow Wedbush analyst Strecker Backe, along with a group of investors, have toured both Tesla’s Gigafactory in Sparks, Nevada, and its manufacturing plant in Fremont, California, over the past few days to better understand how production and demand dynamics are playing out.
The duo walked away doubling down on its bull case, encouraged by what it saw as improved battery and vehicle production at the factories, and undeterred by the share-crushing chaos that has enveloped the electric-car maker in recent months.
Never mind issues like CEO Elon Musk’s ongoing battle with the Securities and Exchange Commission, employees being asked to help deliver cars by quarter-end, and what many analysts call a demand problem – it has all done little to derail the bullish Ives, who has a price target of $390 – nearly 43% above the $273 a share where Tesla was trading on Wednesday.
“It was jaw-dropping in how efficient that process has now become in the tent,” Ives told Markets Insider, referring to the Model 3 sedans being produced underneath a giant tent at the Fremont factory. “This is not a company that’s slowing down production.”
While declining to elaborate on how many people were working underneath the tent or who from the Tesla accompanied the tour, Ives said his group viewed a “robust” and “streamlined” production process.
“In terms of the tent, this is not a situation where you have workers taking lunch breaks and relaxing,” Ives said. “You sense at Fremont this is a company that has pressure on the manufacturing process, just given underlying demand they’re seeing in Europe and China.”
Analysts are concerned that demand for Tesla’s cars is waning, and while Ives says appetite in the US has indeed softened, he believes bearish investors are missing the bigger picture: “They’re viewing this as the start of the end, whereas I view this as more of an air pocket.”
When asked Wednesday how he could comfortably recommend investing in a company led by a CEO involved in an ongoing dispute with the Securities and Exchange Commission, Ives told Markets Insider that he’s focused on the company’s long-term potential.
“I view this as a company where, it was never going to be an easy road for Tesla,” he said. “A lot of the issues are unfortunate that are happening with the SEC and Musk, and it’s created a sideshow that’s been a bit of an overhang on the name. But I look at the name as the first inning of what I view as a massive EV transformation that’s going to happen over the next decade.”
Ives also said some of the production issues at the Gigafactory appear to be resolved, and wrote in a report to clients out Wednesday that he believes the company’s goal of producing enough batteries for 7,000 Model 3 sedans per week is realistic with “more automation, robotics, data analysis, and streamlined capacity in Giga.”
As for the production and assembly of the Model Y crossover SUV – unveiled at Tesla’s Hawthorne, California, design studio last week and set to debut next year – Ives believes that will be done at the Gigafactory.
Meanwhile, across the Fremont factory’s floor and in the tent there was “laser focus” on producing vehicles shipping off to Europe and China, Ives wrote in his note.
Tesla earlier this year began building out a Gigafactory in China, its first such factory outside the United States. Ives is encouraged by the kind of growth it could spur.
Tesla shares have fallen 18% so far this year through Wednesday.
Read more Tesla coverage from Markets Insider and Business Insider:
- A former Tesla investor explains why he thinks Elon Musk is the wrong person to lead the company, why he dumped the stock, and what he’s now buying instead
- Tesla is in ‘demand hell’ ahead of its Model Y unveiling, Wall Street’s biggest bear says
- Tesla is asking employees to volunteer and help deliver 30,000 cars before the end of the quarter
- Markets Insider