Next week will be a big one for Tesla (TSLA). Alongside its annual shareholder meeting, on Tuesday (September 22) the EV maker will host its highly anticipated Battery Day. The event has been the source of much speculation as to what delights will be on offer from Musk and Co.
Deutsche Bank analyst Emmanuel Rosner has an idea of what to look out for.
“We believe Tesla could unveil a new insourced manufacturing system to ramp up battery capacity, improved cell chemistry with greatly-enhanced performance, and fast-declining cost curve,” the analyst said. “While media and investors’ expectations for the event are high, we believe these announcements could meet many of them, and reinforce Tesla’s position as a technology leader.”
Battery capacity has already been noted as a major impediment to future growth. As such, Rosner anticipates a formal unveiling of the Roadrunner, Tesla’s battery cell manufacturing system. Expected to utilize technology obtained from Hibar and boasting the dry battery electrode (DBE) technology developed by Maxwell, the Roadrunner should “enable Tesla to scale up its battery volumes quickly while reducing cost and increasing density.”
Rosner expects Tesla to “boost its battery output significantly and battery costs to trend well below $100/kWh in the next few years.”
Additionally, the event could also shine a light on the development of the fabled “million mile” battery, which is expected to incorporate some advanced chemistry research work done by Jeff Dahn.
So, with such a catalyst on the horizon, should investors pick up Tesla shares? Not quite.
Although Rosner believes investors’ “ongoing enthusiasm for EV plays” will probably continue to prop up Tesla’s lofty valuation, the analyst counts “demand deterioration” while Tesla sets about making improvements to production as the largest investment risk. Additionally, rising competition in an increasingly crowded EV space “could eat away at Tesla’s lowest cost advantage longer term.”
Therefore, Rosner rates Tesla shares a Hold, although the price target gets a meaningful boost. The figure moves from $300 to $400, yet still implies a 9.5% downside from current levels. (To watch Rosner’s track record, click here)
Overall, Rosner’s colleagues are reading from the same EV manual. Tesla's Hold consensus rating is based on 5 Buys, 15 Holds and 10 Sells. However according to the Street, there’s even more downside in the cards. Going by the $307.73 average price target, the analysts expects a 29% share price drop in the year ahead. (See Tesla stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment