The "green tidal wave" is about to launch, properTesla to soar 51pc as sales signal ‘green tidal wave’,
Wedbush saysMatthew FoxApr 6, 2021 – 11.13amKEY POINTS
- Tesla’s strong first-quarter sales represent a “paradigm change” and signal a “green tidal wave”, Wedbush’s Dan Ives said.
- Mr Ives upgraded shares to “outperform” and increased his price target to $US1000, a potential upside of 51 per cent.
- Mr Ives said Tesla could exceed 850,000 deliveries for the year.
Tesla is off to a strong start so far this year as pent-up demand helped its first-quarter deliveries beat analysts’ expectations despite a chip shortage.
The sales results represent a “paradigm change” for Tesla and signal that a “green tidal wave” is looming, the Wedbush analyst Dan Ives said in a note on Sunday.
Mr Ives upgraded Tesla to “outperform”, added the stock to Wedbush’s “Best Ideas” list and increased its price target to $US1000 ($1305), representing potential upside of 51 per cent from Thursday’s close.
“Tesla’s Model 3/Y is hitting its next stage of growth as part of a global green tidal wave under way,” Mr Ives said, adding that he thinks the electric vehicle maker could exceed 850,000 deliveries for the year and even hit a 900,000 stretch goal.
A big catalyst for Tesla is US President Joe Biden’s green-energy agenda – mainly, Congress removing the sales-quota ceiling for EV tax credits could significantly lower the end price of Tesla vehicles for US consumers, Mr Ives said.
The $US7500 tax credit phases out once an auto company hits 200,000 EV sales. Tesla and General Motors have surpassed that sales quota, in effect eliminating the tax credit for their vehicles.
“We believe this dynamic is about to change in a big way for Tesla as we expect Congress to ultimately remove the ceiling on the EV tax credits as part of the broader $US2.3 trillion Biden infrastructure plan,” Mr Ives said.
The analyst said Congress might also increase the tax credit to $US10,000 to “catalyse EV consumer demand”.
Mr Ives thinks Tesla is best positioned to capitalise on the growing EV market. It now represents 3 per cent of all car sales, but that could surge to 10 per cent by 2025 “as the auto sector is transformed green over the coming years”, the note said.
“With a green tidal wave kicked off by Biden last week in the US, and global EV demand skyrocketing going after a $US5 trillion TAM [Total Addressable Market] over the next decade, we believe these delivery numbers are a paradigm and sentiment shifter for the space going forward,” Mr Ives concluded.
