Tesla has 104% upside potential in bull-case scenario as global demand for EVs hits tipping point, Wedbush says
- Tesla's inclusion in the S&P 500 and its "sustained path to profitability" means the bull story is now all about an acceleration in demand for electric vehicles, according to a note from Wedbush.
- As global demand for EVs hits a tipping point, Tesla could surge 104% in a bull-case scenario to $1,000, Wedbush said in the note.
- "New designs around Cybertruck and Model Y will further aid growth globally and thus enable Tesla to achieve its million delivery units likely by 2023," Wedbush said.
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An inflection point in global demand for electric vehicles will propel Tesla to $1,000 in a bull-case scenario, representing potential upside of 104% from Friday's close.
That's according to Wedbush, who said in a note on Sunday that Tesla's inclusion in the S&P 500 and its "sustained path to profitability" means the bull story is now all about an acceleration in demand for electric vehicles.
Five consecutive quarters of profitability helped secure Tesla's place in the S&P 500 earlier this month.
Global demand for electric vehicles is surging, Wedbush said, noting that 3% of all auto sales are electric. The firm expects that number to more than triple to 10% by 2025.
"This demand dynamic will disproportionately benefit the clear EV category leader Tesla over the next few years especially in the key China region which we believe could represent ~40% of its EV deliveries by 2022," Wedbush said.
According to Wedbush, Tesla has seen "Teflon-like demand" amid the COVID-19 pandemic, which shuttered its production plants in California for more than a month. Despite the brief factory shutdown, Tesla remains within reach of its 2020 target to deliver 500,000 vehicles.
Tesla could even double its current production rate to 1 million vehicles by 2023, according to Wedbush.
"New designs around Cybertruck and Model Y will further aid growth globally and thus enable Tesla to achieve its million delivery units likely by 2023," Wedbush said.
A potential boost to demand that will help Tesla reach those levels includes an increase in consumer EV tax credits and incentives under a Joe Biden presidency, according to Wedbush.
And while a rise of start-up EV companies garnered a lot of attention this year, Tesla will be well ahead of its rivals thanks to its production capabilities, battery and technology innovations, and brand awareness, Wedbush noted.
Still, despite the optimistic bull-case scenario forecast, Wedbush remains Neutral on shares of Tesla and raised its 12-month price target to $560 from $500, representing potential upside of 14% from Friday's close.