Tesla (TSLA) officially opened its German Gigafactory on Tuesday, with CEO Elon Musk and German Chancellor Olaf Scholz attending the ceremony. Tesla stock jumped 7.9% on Tuesday to close at $993.98.
In addition to manufacturing electric cars, Tesla also makes solar panels and energy storage products.
The opening of the German plant saw the delivery of the first cars produced at the facility, the Model Y type, to some 30 customers and their families, according to a Reuters report..
Targets 500,000 Cars Annually
It took Tesla about two years to get the German factory, also called Giga Berlin, up and running. Local authorities cleared Tesla to begin production at the plant on March 4, although Musk had hoped the facility would open some eight months earlier. The project was hit by licensing delays and also faced protests over its environmental impact.
The factory is expected to produce 500,000 cars annually at full capacity. In addition to producing cars, Tesla also plans to produce battery cells for its cars at the Giga Berlin facility. According to Elon Musk, the company expects to employ 12,000 workers at the factory and has already hired about 3,500 people to begin with.
Volkswagen vs. Tesla
Volkswagen, which sold more than 450,000 battery-powered electric cars globally in 2021, is Tesla’s main competitor in Europe. Compared to Tesla’s 13%, Volkswagen has a 25% share of the European electric vehicle market.
But the German plant may be a game changer for Tesla. The company recently imported cars from China to sell in Europe. Ahead of the opening of the German facility, Musk said in a tweet that localizing production within a continent is great for capital efficiency. The German plant, located just outside Berlin, will be Tesla’s flagship European manufacturing hub.
Wall Street’s Take
On March 21, ahead of Tesla’s Giga Berlin official opening, Wedbush analyst Daniel Ives maintained a Buy rating on Tesla and a price target of $1,400, which implies a 40.9% upside potential.
The analyst noted that Tesla has been struggling to keep up with strong demand for its cars, with some markets experiencing delays of up to six months in Model Y and Model 3 deliveries. Ives sees the opening of the Giga Berlin, easing Tesla’s supply challenges and aiding the company grow its market share in Europe.
Additionally, Ives expects the official opening of the German factory to eliminate a major overhang on Tesla stock. The analyst observed that some investors had doubted if the facility would ever open considering the delays and disputes around it.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. Based on 15 Buys, six Holds, and six Sells, the average Tesla price target of $1,062.4 implies 6.9% upside potential to current levels. Meanwhile, TSLA shares have gained 32% over the past six months.
Blogger Opinions
TipRanks data shows that financial blogger opinions are 75% Bullish on TSLA, compared to a sector average of 68%.
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