News of Tesla Raising Production?
Hurry, time for another note!
3 Key Thoughts by Adam Jonas:
1. We do not expect Tesla production to surpass an anal run-rate of 500k until late 2020. The Bloomberg article, citing the leaked email to Tesla employees from its Automotive President Jerome Guillen, suggested "several" parts of the China assembly line are in already in place. TSLA said in their 1Q19 shareholder letter "Vehicle production will be significantly higher than deliveries" and "If our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000 vehicles globally in 2019."
2. We expect China to account for less than 200k units of delivery toTesla through 2022. While we anticipate significant pent-up demand for Tesla ́s locally produced vehicles in the PRC, longer-term we expect the Chinese EV market to remain highly competitive and see Tesla ́s China volume peaking at 254k units in 2024, before falling to the 160k to 170k range by 2030.
3. We suspect both bulls and bears to use the near term boost in newsflow/sentiment to sell the stock. Clearly the debate around demand for Tesla ́s products has become less one-sided in recent weeks and appears to be in a fluid situation. That said, we believe the conviction, passion and time horizon of the prevailing bear case in the market may take several more months or quarters to break.