Tesla’s new Gigafactory is its biggest strategic endeavor in a decade: analyst


Tesla’s (TSLA) Berlin Gigafactory is now live, and it will be super important to the EV giant’s future, analysts say.

On Tuesday, the factory received CEO Elon Musk, who presented customers with the first Model Ys made at the facility. Tesla’s new factory is 20 or so miles southeast of the German capital and houses roughly 10,000 employees. The factory cost north of $5.5 billion to construct.

“We view the opening of Giga Berlin as one of the biggest strategic endeavors for Tesla over the last decade and should further vault its market share within Europe over the coming years as more consumers aggressively head down the EV path,” Wedbush analyst Dan Ives said. “We cannot stress the production importance of Giga Berlin to the overall success of Tesla’s footprint in Europe and globally, as the current Rubik’s Cube logistics of producing cars in China at Giga Shanghai and delivering to customers throughout Europe was not a sustainable trend. The Berlin factory establishes a major beachhead for Tesla in Europe with potential to expand this factory to production of ~500k vehicles annually with Model Y front and center over the coming 12 to 18 months.”

Ives adds the opening of the site removes an “overhang” on the stock. The analyst rates Tesla Outperform with a 12-month price target of $1,400.

The factory should also help Tesla compete more aggressively with European behemoth Volkswagen, which is making a huge EV push, Vollkswagen Group of America President and CEO told Yahoo Finance Live Monday.

Other big bets

While Tesla unwraps its shiny new factory, Wall Street analysts are speculating the company has other bold moves up its sleeves.

“In our view, the chance that Tesla does not ultimately offer products and services to the eVTOL [electric vertical takeoff and landing aircraft]/UAM market is remote. The potential skills transferability and network adjacencies are too strong to ignore,” Morgan Stanley analyst Adam Jonas said in a new research note.

Jonas believes the segment would be called “Tesla Aviation,” and be a logical evolution of the company’s prowess making electric vehicles. It would also tap into a potentially lucrative market.

By 2030, Morgan Stanley estimates the total addressable market (TAM) for the eVTOL industry in the U.S. could reach $12 billion, powered by interest in non-fuel powered short haul aircraft.

Looking out to 2050, the investment bank projects the global eVTOL market could be worth $9 trillion as companies and government seek ways to reduce road congestion via a green-friendly option.

Morgan Stanley’s Jonas thinks eVTOLs are just one area Tesla will venture into the decades to come. Another promising venture could be Tesla’s auto operations collaborating with CEO Elon Musk’s other companies, such as The Boring Company and SpaceX.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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