At the start of March, Tesla (NASDAQ:TSLA) held an investor day, during which it said that since being established, it had achieved cumulative production of 4 million units.
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Given that the EV leader saw out 2022 having reported production of ~3.725 million vehicles, this suggests that in the first 2 months of 1Q23, the company produced ~275,000 units.
Barclays analyst Dan Levy notes that during January and February, the company faced several production challenges in Shanghai (Chinese New Year, COVID reopening), while he also expects that, at both the Berlin and Austin facilities, daily production rates during March will outstrip those notched in January/February. In fact, just recently (March 25), Tesla said that production in Berlin had reached 5,000 units/week, an increase on the 4,000/week reported in late February.
“For this reason,” Levy goes on to say, “alongside a largely disruption-free March, we modestly raise our production estimates to 430k up from our ingoing estimate of 408k, and have fair confidence in Tesla’s ability to reach or exceed consensus for the quarter on deliveries.”
So, Levy sees a beat on the way for Tesla. He now expects Q1 deliveries will reach 425,000 units, “modestly” ahead of consensus at 420,000, and a sequential increase on 4Q22’s 405,000. The figure is also ahead of his prior expectation for ~423,000 units.
“We believe a beat could be a catalyst for the stock, as expectations have come down amid signs of softening demand,” he went on to add.
Regarding waning demand, to kickstart demand, Tesla’s early Q1 price cuts gave it a boost. Since then, other OEMS have gotten in on the act. As such, and against “questions of weak macro,” Levy sees more price cuts on the way. “Moreover,” Levy summed up, “with Tesla likely to continue ramping production at both Austin and Berlin, additional supply is likely to drive further price cuts.”
All told, Levy rates TSLA shares an Overweight (i.e., Buy), along with a $275 price target. The implication for investors? Upside of 47.5% from current levels. (To watch Levy’s track record, click here)
Overall, 33 analysts have waded in with TSLA reviews over the past 3 months and these breakdown into 20 Buys, 10 Holds and 3 Sells, all culminating in a Moderate Buy consensus rating. Going by the $212.89 average target, the shares will climb 14% in the year ahead. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
