Tesla china flood12/24/2023 ![]() ![]() With its geographically spread Gigafactories, Tesla ensures a steady and cost-efficient supply of its EVs by staying close to the end customer while at the same time capturing the rising trend for global EV demand. EV market struggles with price cuts and rising inventories. Tesla also offers geographical diversification in a time of geopolitical uncertainty, and when the U.S. We also expect similar legislative initiatives to be adopted around the world in the near future, and as mentioned we anticipate 70-80% of global vehicle production to be EVs by 2040. Tesla is well positioned to capture on this opportunity through its Berlin-based Gigafactory, and most likely one more factory will be announced soon as demand prospects within the EU remain strong. This new legislation poses a strong growth catalyst for Tesla shares. One important move towards net-zero emissions is the European Union's adoption of the new CO2 standards for cars and vans in March 2023, where carbon emissions are to be reduced by 55% and 50% for new cars and vans respectively by 2030 (compared to 2021), and 100% for both by 2035. Hence, it's highly plausible that Tesla will reach 15+ million yearly EV deliveries in the next ten years. By 2035, all new cars and vans are planned to be electric in the EU and we expect 70-80% of global deliveries to be EVs by 2040. This trend should continue as country officials keep enacting on the Paris Agreement and take us toward a more sustainable society.įurthermore, global car production for 2023 is expected to end at 70 million vehicles per year, and by 2030 we'll likely see a global production of 100 million cars per year. The IEA expects EV sales to reach 14 million by the end of 2023, a 35% YoY increase. In 2022, 10 million EVs were sold and its market share has more than tripled in the last three years, from around 4% in 2020 to 14% in 2022. The fact is that the market for EVs is flourishing, with sales seeing exponential growth rates. Global DemandĬontinued demand for electric vehicles is a focal point for Tesla's ambitious growth plans. There's no doubt Tesla will keep announcing new factories as global demand continues to surge. This would take EV deliveries up to 3-4 million vehicles per year for Tesla. Tesla is now planning a fifth factory, this time in Mexico, with production estimated to begin in late 2024 or Q1 2025 with an annual capacity of reportedly 1-2 million vehicles. ![]() To reach 15 million EV deliveries per annum in the next ten years is realistic. However, we believe 20 million EVs is a bit of a stretch. If Tesla manages to maintain its exponential growth rate of 50% per annum, this target may be reached in just a few years' time. The company has seen an exponential growth rate since 2016, driven by a strong global demand, and Tesla has a bold goal to deliver 20 million vehicles per year. Based on those premises, the transition toward an electrified vehicle industry is mandatory, and Tesla is perfectly positioned to benefit from it. However, the main catalyst for Tesla is the Paris Agreement and the legislative initiatives that stem from it. Secondly, Tesla's hardware-related efforts are to be accompanied by an acceleration of AI, software, and fleet-based profits. ![]() First, the company aims to improve profit margins by executing on innovations to reduce the cost of manufacturing and operations. This serves to leverage the underlying value of the stock as revenues continue to rise. Tesla is also working towards efficiency on so many levels in order to improve profit margins and reduce risk. Tesla's ability to remain the market leader for the past years manifests as proof of its quality and brand recognition around the world. We believe all pieces are in place for Tesla shares to continue their positive path. So, what is needed to take Tesla to new highs? The green transition is the main catalyst, although we also expect Tesla to maintain a strong market share and improve profit margins. Tesla has increased production above our previous forecasts, which is great, and has managed to maintain its position as a market leader in terms of electric vehicle ("EV") Sales with an astonishing market share of 20% in Q2 2023, equivalent to 2021 years levels, only with a temporary dip in 2022. ( NASDAQ: TSLA) since our last coverage of the stock. ![]()
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