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Tesla Motors Inc (TSLA) Battery Slash Brings Business Boon

Tesla Motors Inc Model S Charger

Tesla Motors Inc knows the value of its Gigafactory project to its long-term growth. Without the Gigafactory, its goal of selling 500,000 cars by 2020 is nothing more than a dream. Analysts in the market knows this for a fact; hence, the bullish needle moved for Tesla when it hinted that it was moving on with a deal with Pure Energy Minerals for the supply of lithium.

Tesla Motors Inc Model S Charger

Ars Technica reports that Tesla has signed a deal with Pure Energy to develop a lithium mine in Nevada. The mine site is close with the battery plant (about three and a half hours) and it makes it easier for The EV maker to produce its much-needed batteries. Last month, Elon Musk was also in the news about the signing of a deal with Bacanora and Rare Earth to develop a lithium mine in northern Mexico.

Analysts are bullish on Tesla

Analysts are bullish on Tesla after the report that it is working out the kinks that would ensure the success of the Gigafactory. Analysts from Jefferies are sure that the firm is on track for a 50% slash in battery costs by 2020 when the factory is working fully.

A 50% drop in battery price will make it easier for Tesla Motors to compete with rivals on price, and the firm will also have higher margins for profits. The analysts have thus raised their price target on Tesla Motors from $360 to $365 with a “Buy” rating on the stock.

Tesla Motors move is miles ahead of the competition

Tesla Motors builds EVs but EVs are nothing more than a fancy shell without batteries. The firm’s move into making its own batteries on a large scale in tandem with its growth plans makes it easier for Tesla Motors to control each stage in the EV chain.

For one, Tesla makes EVs, it makes the batteries that power them, it sells the cars without dealers, and it controls a network of superchargers for fast-charging. The success of its battery project has also helped the firm to launch an Energy segment that sells Powerwall to homes.

In contrast, the known rivals of Tesla in the EV space are still at the point concept cars of their EVs. Drawing a concept car is easy, anybody can design a concept car, but until the rivals build actual cars that are better than Tesla’s current cars, Tesla is still the king of the road. Even after they have built their cars, they’ll still need to match Tesla is producing batteries and a robust charging solution.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.