EV (electric vehicle) titan Tesla (NASDAQ:TSLA) is poised to win millions of dollars in federal grant awards as the company is racing ahead of its competitors in building the charging network across the U.S. highways.
A Wall Street Journal report highlighted that Tesla has emerged as the winning bidder to build chargers at about 18% of the sites selected by states using federal dollars to fund fast chargers, which is more than any other company.
Tesla’s proprietary Supercharger network is the largest globally, providing it with a significant competitive advantage. Earlier this year, the Biden administration announced that Tesla would open a part of its charging network to other EV makers, which makes it eligible to scoop up millions in federal grants. Notably, the government rolled out a multi-billion-dollar plan to build a national network of EV chargers.
At the end of Q2, Tesla had a global supercharging network of roughly 50,000 connectors and over 5,000 locations. Moreover, Ford Motor Company (NYSE:F), General Motors (NYSE:GM), Mercedes-Benz (MBGYY), and other OEMs have signed up to use Tesla’s connector and gain access to its charging network.
While TSLA is leading the EV charging race, let’s look at what the Street recommends for its stock.
Is Tesla Stock a Buy or Sell?
As the leading company in the EV space, Tesla is well-positioned to benefit from the growing shift towards clean energy. Its strong volumes, largest charging network, and services augur well for long-term growth.
However, the company’s margins have trended lower over the past several quarters, reflecting lower average selling prices. Tesla is sacrificing its margins in the near term to push volumes. Moreover, it launched cheaper models to maintain its leadership in the EV sector.
Tesla boss Elon Musk doesn’t see the short-term margin variances as a concern and expects that autonomy will enable it to recoup margins. However, analysts are cautious over the increased pressure on margins and remain on the sidelines.
TSLA stock has a Hold consensus rating on TipRanks, reflecting 12 Buys, 13 Holds, and five Sells. Meanwhile, these analysts’ average price target of $257.75 implies 5.20% upside from current levels.
