Daiwa Securities Upgrades Tesla Stock

Daiwa Securities analysts upgraded their outlook on Tesla stock, citing increases in oil prices and Tesla’s upcoming expansions in production capacity.

Daiwa analyst Jairam Nathan especially cited the near completion of Gigafactory Berlin, which is simply awaiting regulatory approval to finalize construction and begin production for the European market. He also said that Tesla’s ability to manage supply chain issues like the ongoing semiconductor chip shortage was a factor.

Tesla has previously floated the possibility of taking extra steps to secure a reliable supply of semiconductor chips. Its Model 3 also earned the top “American Made” rating from Cars.com for the company’s insistence on manufacturing many parts at facilities close to its existing vehicle assembly factories and sourcing metals from countries with strong environmental regulations like the United States.

Nathan upgraded Tesla stock (NASDAQ:TSLA) from “Neutral” to “Outperform,” setting a price target of $900. On January 25, TSLA traded at $801.83

Most Tesla vehicles for the European market are currently manufactured at Gigafactory Shanghai. Tesla has occasionally expressed frustration with the slow regulatory process because Gigafactory Berlin is likely to be a major factor in breaking its reliance on China.

The Chinese government has occasionally taken an unfriendly stance toward some of Tesla’s technology, especially its vehicles’ onboard cameras, which it claimed could be used for espionage by capturing video footage of sensitive activities at government facilities. Tesla denies that its cameras are active in China but built a datacenter in China anyway.

Demand for electric vehicles is expected to continue its growth. Nathan based his analysis on Tesla being the “best positioned” to meet that demand.

Tesla was an early mover in the EV space and is credited with getting the automotive industry in general to take EVs seriously. It was the first to produce dedicated charging stations for its EVs, which it said will become available to owners of EVs made by other automakers through a special adapter. It continued to set records for quarterly deliveries with more than 300,000 vehicles delivered in Q4 2021.

The price of oil topped $100 a barrel on February 24, likely driven by worldwide events like Russia’s invasion of Ukraine. Russia is a major oil exporter. Increased demand for oil as some countries and regions drop COVID-related restrictions is also a likely factor in the price increase.

Besides the expected organic growth in demand for EVs, some countries and regions like the UK and the U.S. State of California legally require that automakers phase out the sale of new gas-powered vehicles by the 2030s. Analysts say one challenge is that the UK alone will need millions of EV chargers to manage the transition.

Oxford is doing its share with the development of the Oxford Superhub, which it bills as “Europe’s most powerful EV charging hub.” Tesla has also worked with companies like Fastned to install Superchargers at charging stations in Europe and registered a trademark for a restaurant that may open at Supercharger stations in the future.

Some EV manufacturers may be more ready for the UK’s and California’s required transition to EVs than others. Although GM said it would invest heavily in increasing its capacity to manufacture EVs, it sold only 26 electric vehicles in all of 2021.