Despite the current economic downturn, and a “difficult quarter” for Tesla according to Elon Musk, one analyst recently upgraded the company’s share with reference to “favorable” positioning. The analyst claims that Tesla is well-positioned for both the short- and long-term markets, largely due to its early focus on vertical integration.
Joseph Spak of RBC Capital upgraded Tesla’s share to perform better, saying the electric carmaker has a “more favorable short-term setup”, according to Market Watch. Spak also noted that Tesla’s vertically integrated model will give it a competitive advantage in the medium and near term.
For the second quarter, most analysts expect Tesla to deliver about 279,000 units, Spak said, with estimates for the buying side of the industry as low as 250,000 units. Spak predicts that Tesla will deliver 249,000 units, with room for an upside to the estimate if Tesla’s Gigafactory Shanghai is fully operational again as set out in some reports.
In addition to deliveries, Spak says Tesla can expect to see a rising margin in the second quarter and in the back half of the year, despite expectations for delivery declines from the first to the second quarter. With price increases, Tesla can see an increase of up to 3 percent in average sales prices, “given the price actions that Tesla took back a while but was unable to realize as they worked through their backlog.”
To be honest, most car manufacturers have increased their prices. And while the move may not benefit buyers, it could help Tesla get through the current economic era as inflation destroys raw materials.
Tesla raises prices to address supply chain challenges. Youtube: Reuters
However, the demand for Tesla’s vehicles is still huge. At the time of writing, US Tesla orders of the Model 3 RWD and AWD Long Range variants have an estimated delivery from September to December, while the Model Y Long Range variant has an estimated delivery from January to April of 2023 . Both the Model 3 and Model and Performance models arrive much sooner, with delivery estimates from June to August and August to October, respectively.
Tesla’s supply chain transactions may have helped mitigate the effects of inflation by hitting commodities, with Spak emphasizing this as part of the key to its advantageous positioning in the industry.
“While TSLA is fairly secretive about the transactions they have concluded for the supply of raw materials, we believe they have done more than other OEMs in the conversation with contacts,” Spak said. “The company’s early focus on vertical integration (not just batteries / raw materials, but also cars, semis, software) is likely to bear fruit.”
Originally posted on EVANNEX.
By Zachary Visconti
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