Tesla Stock: Tempting? Sure, but It Might Not Be a Buy

To enable scaling, increase simplicity, and mitigate geopolitical risks in its supply chain, Tesla (NASDAQ:TSLA) has been throwing some weight behind its Austin facility.

This conclusion was reached by Oppenheimer’s Colin Rusch following a recent tour of the factory. The 5-star analyst sees the company investing in important innovations, gaining an edge over its rivals. According to Rusch, Tesla’s efforts in lithium refining, vehicle simplicity, materials optimization, and software learning cycles are notably ahead of its peers.

In May, production levels at the Austin plant reached 5,000 vehicles per week, shortly after the Berlin facility achieved the same milestone. Rusch believes that the production of the 4680 battery cells currently supports a run rate of 1,000 vehicles per week. The analyst opines that Tesla is likely to allocate the majority of its 4680 capacity to the Cybertruck ramp, given the increased availability of 2170 battery capacity from external vendors.

Rusch also notes the company’s pivot to a 48V architecture (compared to 12V beforehand) could ultimately lower Cu (copper) content in vehicles by as much as 12-16x whilst also driving “incremental motor efficiency.”

There are also ongoing developments in Tesla’s full self-driving (FSD) efforts. To improve navigation systems, the company continues to leverage its data collection advantage. With the ramp-up of its Dojo supercomputer, Rusch believes the learning cycle could be approximately 10 times faster.

However, despite these initiatives and Tesla’s leading position in the industry, Rusch considers automotive gross margins as the biggest concern at present. Nonetheless, he suggests that investors may still be attracted to Tesla, stating, “We remain cautious about an uncertain macro backdrop and margin expansion timing, but note that shares may move higher in the near term as TSLA outperforms peers in a choppy market.”

To this end, Rusch maintained a Perform (i.e., Neutral) rating on Telsa shares with no fixed price target in mind. (To watch Rusch’s track record, click here)

Most analysts do have a specific price target, and its average on the Street currently stands at $202.84, suggesting room for modest growth of 6% over the course of the year. Rating wise, based on 15 Buys, 11 Holds and 4 Sells, the consensus view is that this stock is a Moderate Buy. (See Tesla stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.