Bernstein: Is Tesla The Greatest 'Bottleneck' To Its Own Success?

Tesla Inc TSLA has struggled with meeting Model 3 demand, and while analysts expect the broader industry to suffer similar roadblocks in electric vehicle development, Tesla’s impediments are both unique and self-inflicted, according to Bernstein.

The Rating

Bernstein analyst Toni Sacconaghi Jr. maintained a Market Perform rating on Tesla with a $265 price target.

The Thesis

Bernstein projects potential supply-demand imbalances in battery elements and in batteries themselves, hindering the electric vehicle industry.

The former scenario would result in higher prices for the commodity in demand, be it nickel, cobalt or copper, but, by Bernstein’s assessment, the worst case would drive a $1,500 to $2,000 increase per vehicle.

“We believe a bottleneck in battery commodities would be a modest (but surmountable) headwind to the electric vehicle industry — and perhaps a relative positive for Tesla, which has better pricing power than competitors,” Sacconaghi said in a Monday note.

Battery production bottlenecks are seen to be similarly insignificant, and even as potential tailwinds for Tesla, as the automaker does not rely on shared suppliers but controls its own production.

“Our conclusions particularly resonate for Tesla: market bottlenecks aren't going to make or break the company,” the analyst said. “Instead, we see the company itself as its own greatest ‘bottleneck’ — i.e., can Tesla really execute on its ambitions?”

Considering skepticism around Model 3 goals and capital availability, Bernstein maintained its Market Perform rating on the stock.

Price Action

Tesla began the day with a 1.5-percent drop but was up slightly at the time of publication.

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Photo courtesy of Tesla.