Though Tesla (NASDAQ:TSLA) stock has gained 282 percent so far this year, some analysts believe the electric car maker has only completed part of its journey. Deutsche Bank was the latest to weigh in on Tesla, raising its rating to buy late in the week, as reported by Fox Business and other sources. The Deutsche upgrade sent the stock to a 4 percent jump during Friday trading in New York. Whether Tesla can justify a $160 price target remains to be seen. Here’s how it’s possible.
Keep the Good Times Rolling
Every time Tesla is in the news, the topic is usually favorable. From increasing the scope of its supercharging network to introducing a revolutionary concept in battery swapping, Tesla seems hardwired for making a positive impression on the media and the public in general. CEO Elon Musk is the sort of charismatic personality investors love. He’s also entirely focused on changing the perception of electric vehicles and pushing to turn all negatives into positives.
It’s the Performance, Stupid
A survey of Tesla vehicles gives the impression the automaker tossed price concerns aside and simply tried to make the best vehicle possible — one that didn’t use gasoline. Judging by the 99 score the Model S received from Consumer Reports, the program is working. Instead of producing a car the masses could afford, Tesla chose instead to place style and performance above all else. It’s a brilliant concept.
The Model X, the next car on the way from Tesla, will likely be another winner in terms of popularity and critical acclaim. Reports of the SUV-style vehicle claim it will go 0-60 in under 5 seconds. It’s yet another hallmark of a company that believes in performance first. It’s rare for automakers to think this way, and Tesla is certainly the first EV maker to do so. In fact, the hiring of an Aston Martin engineer (per Car Buzz) would suggest Tesla will push the envelope further in the coming years.
Removing the Concerns about Electric Vehicles
Every time Elon Musk stages an event, it seems to address the concerns of the public with respect to electric vehicles’ limitations. The biggest perceived drawback has been the range of EVs. After all, who leaves the house unless planning to drive over 250 miles? Despite the preposterous concerns over Tesla’s “limited” range, the EV maker quickly set about resolving the issue for good.
Tesla delivered two options. In the first case, drivers could plug into a supercharging station and get a full charge for batteries within 30 minutes. This service is free for drivers with 80 kWh cars, and will be forever, according to the company. The innovative battery swap system will take a minute or two, come with a charge comparable to the price of a gas tank fill-up, and give drivers a range of 500+ miles with only a short stop on the highway. Problem solved.
Now, what about growth?
Justifying the Leap to 400 Percent Growth
Tesla is about to reach 300 percent growth for this year alone, an amazing feat in itself. Yet the Deutsche Bank upgrade suggests 400 percent growth is entirely possible. Analysts for the bank believe Tesla has singlehandedly made EVs relevant, and will start competing with n0n-electric luxury vehicles soon enough, according to Fox Business. The news outlet also noted how Deutsche believes the profit margins for the next-gen Model S — the smaller, less expensive version — are going to be fantastic.
The last remaining downside would be the ability to keep production rolling on target, and to actually increase the rate Tesla is making its cars without sacrificing quality. Otherwise, there seem to be few obstacles in the way for the EV maker, now well on the way to becoming one of the great success stories of recent times.
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