Why Tesla Motors Inc (NASDAQ:TSLA)’s stock will hit $300 was discussed by Andrew Fung, vice president, auto and auto parts at CLSA Americas, LLC, in an interview on CNBC.
The discussion about Tesla Motors Inc (NASDAQ:TSLA) comes after CLSA Americas, LLC initiated coverage on the stock with an “Outperform” rating and a price target of $300.
According to Fung, the bullish outlook on Tesla Motors Inc (NASDAQ:TSLA) is due to his firm’s belief that the automaker will substantially increase its volumes next year.
“Tesla currently only addresses about 5% of the luxury market in the U.S. and only recently started sales in China so we see significant opportunity for volume growth over time. We expect volumes to double next year with the launch of the Model X and growth of 400,000 units by 2020 […],” Fung explained.
Furthermore, he said that CLSA Americas, LLC believes this volume growth will be largely driven by the decline in the price of the battery pack the electric car maker uses in its vehicles. Tesla Motors Inc (NASDAQ:TSLA) recently signed a deal with Panasonic Corporation to build its “Gigafactory,” a large-scale battery pack manufacturing facility that not only aims to lower production cost but also increase production volumes for these energy-storage devices.
According to Fung, his firm also does not see any demand problems for the company’s vehicles. He also noted that material science experts his firm has talked to said that building a lower cost battery for cars is “very much achievable”.
In his note to clients, Fung indicated a possible 40% market share for the company in the electric vehicle segment after it launches its Model 3. According to Fung, while BMW AG will be a formidable competitor in the premium electronic vehicle segment in the next couple of years with its launch of its BMW i3, Tesla Motors Inc will have few competitors in the near-term which means no significant pressure from other companies.
Tesla Motors Inc (NASDAQ:TSLA) investors includes Soros Fund Management managed by George Soros. The firm reported 71,050 shares in the company by the end of the second quarter.