Tesla is reportedly working ahead of schedule to finish the construction of its Shanghai-based Gigafactory 3 and is on the way to becoming the leading luxury EV company in China.
Tesla is moving quickly in China
While there are news reports about workers facing stressful conditions in open-air tent production facilities of the Silicon-Valley based car manufacturer, things are going relatively smooth in China. In fact, Tesla moved a step ahead of its reputation of missing deadlines and recently announced to Chinese media that their Gigafactory 3, based in Shanghai, is being constructed ahead of schedule. The GF3 will produce new Model 3s in China, depending on a global supply in the beginning and eventually moving to reduce costs and produce vehicles faster.
If Tesla continues to thwart its previous reputation of missing deadlines and ramps up production quickly, it will become the “leading luxury EV player” in China, according to Morgan Stanley analysts. The team, led by Adam Jonas, said that they have just returned from visiting the Chinese supplies of the company and have fresh information on the company’s plans in the country. In a note, the team of analysts said,
“If they’re right, Tesla may be able to ramp China production faster than we have currently anticipated in our model.”
What to expect from Tesla?
The analysts have given a price target for $230 for Musk’s company and kept their rating equivalent to neutral. However, their target is about 10% lower than Wednesday’s prices. The team believes that production will start at GF3 in November after which it is expected to make 35,000 to 40,000 vehicles by 2020 and 60,000 vehicles by 2021. They also emphasized that tesla would take over the Chinese luxury EV market in the next three to five years.
This doesn’t mean that its journey in the highly competitive Chinese market will be easy. However, it will continue to peak its sales volume at 254,000 vehicles by 2024. By 2030, the manufacture’s sales figures will drop to 160,000 to 170,000. Note that Tesla’s second-quarter earnings report is expected next week and the company may comment on its China plans. The second-quarter sales for the company have already beaten analyst expectations.
A poll of analysts by FactSet suggests that the company’s adjusted loss for the second quarter will be 41 cents a share, which is significantly lower than an adjusted loss of $3.06 a share during the same period last year. Sales have risen from $4 billion in Q2 2018 to $6.5 billion Q2 2019.
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