TSLA hit all-time highs this week ($291.42) being propelled by a $400 price target by Stifel Nicolaus (although last night's comments by Elon Musk on the stock price has reigned in some exuberance today). The bigger picture for TSLA's recent rise in the past weeks is twofold. First, Tesla is looking to have a monster Q4 later this year in an effort to meet or beat their 35,000 delivery guidance for 2014. If Tesla meets their Q3 delivery guidance of 7800 deliveries then they will need to deliver at least 13,164 cars in Q4, which would be an increase of 68% quarter-over-quarter. Second, Tesla announced in their Q2 earnings report that they expect to be at a 100,000 annual production run rate by the end of 2015. This would be roughly 100% year-over-year growth from their previous 50,000 annual production run rate by end of 2014 guidance. Previously production has been limited by battery constraints, but it appears that Tesla/Panasonic has overcome the supply issue and Tesla is becoming increasingly confident in their ability to ramp production.
The other big news this week was Tesla announced yesterday they will build the Gigafactory in Nevada (see below). The Gigafactory is the key that will allow Tesla to reduce battery costs by at least 30% and allows them to be able to produce the Model 3 (Gen3) car for their target $35,000 price tag without tax incentives. As Model X nears production, Tesla will start setting their focus increasingly toward the Model 3. On one track they must design a super compelling car that will outperform the BMW 3 series, have at least 200 mile range, and yet cost only $35k. On another track Tesla must build the Gigafactory and make sure that it starts producing batteries in time for the release of Model 3 (due sometime in 2017). Since time is of the essence, Nevada made the most sense as it was the state that gave Tesla the most confidence they could meet their timelines.
While the Model S (and soon the Model X) attract the most attention from the media and observers, Tesla is investing huge amounts of time and energy into the Model 3. Key executives like JB Straubel (CTO) and Diarmuid O'Connell (VP Business Dev) are pulling together the many pieces required to make the Gigafactory a reality. This past week marked a major milestone in seeing the Model 3 vision realized.
Tesla Energy
Nevada strikes $1.25 billion tax break deal with Tesla
Here's the summary of the Nevada incentives for the Gigafactory:
- $725 million in sales tax abatements over 20 years.
- $332 million in real and personal property tax abatements over 10 years.
- $195 million in transferable tax credits.
- $27 million in payroll tax abatements over 10 years.
- $8 million in electricity rate discounts over eight years.
- Tesla has agreed to contribute $7.5 million a year for five years beginning in 2018 to education.
Overall, it's a good deal for Nevada and Tesla. And most importantly, Tesla has chosen the best state to build the Gigafactory quickly without delay.
More articles:
California drops out of Gigafactory race
Why Nevada Was Always The Best Bet To Land Tesla's Gigafactory
Model S
Model S owner uses the Tesla phone app to track her stolen car
An entertaining read of how a Model S owner used her Tesla smartphone app to get her stolen car back.
Model X
Model X Reservations near 20,000
Paul Carter of TMC uses crowdsourced data to track Model X reservation numbers. Currently Model X global reservations total 19,953 as of August 31, 2014. In the U.S., Model X reservations have increased from 20.7 per day in July to 25.1 in August. Momentum for the Model X is definitely growing.
TSLA
Stifel Nicolaus' $400 Price Target
"TSLA sentiment is like a freight train, in our view, benefiting from a well manicured growth story that has caught the eye of a much broader investor base relative to most auto stocks. TSLA has positioned itself as the smart vehicle of the future, with a glimpse into smart purchasing and smart infrastructure. TSLA has captivated a global audience, some of whom have lost interest in distinguishing horsepower ratings among the dozens of $100k-plus luxury vehicles, others that would have never considered spending six-figures on anything but a house." - Research note summary
Stifel Nicolaus changed their previously cautious tone and has become a super bull. Here's a decent video interview with their auto analyst James Albertine.
Other News
Another battleground state
"The dealers say Tesla is in violation of a state law which allows for sales of up to 150 vehicles at automaker-owned stores. Tesla has sold 173 cars at its one store -- opened a year ago -- in suburban Atlanta, according to the filing." - CNN
Auto dealers in Georgia want to block Tesla from selling cars directly to consumers. It's a losing battle, that is for the auto dealers.