Why This Tesla Analyst Stays Bullish On EV Giant Despite Q3 Delivery Miss

Morgan Stanley analyst Adam Jonas discussed the challenges facing electric vehicle (EV) adoption in light of Tesla Inc‘s TSLA third-quarter delivery figures falling below estimates.

Positive Outlook: Jonas has maintained an “overweight” rating on Tesla stock with a price target of $400, which he set last month on expectations that Tesla’s supercomputer, Dojo, could unlock new markets for the EV giant and catapult its enterprise value by a staggering $500 billion.

Tesla’s Performance: In the third quarter, Tesla delivered 435,059 vehicles, slightly below the estimated 465,000 units. However, the company still aims to achieve its full-year target of 1.8 million units, providing hope for a robust fourth quarter.

Future Projections: Jonas predicts that Tesla will deliver around 2.48 million units in 2024, representing approximately 33% year-on-year growth.

Challenges Ahead: Jonas anticipates challenges in the rate of EV adoption as stakeholders consider the costs of diversifying from a Chinese-dominated EV supply chain. 

Additionally, EVs tend to have higher repair costs than combustion engine vehicles, and some customers face difficulties with insurance companies regarding EV underwriting. Several EV companies have yet to establish financially viable business models.

Impact of China: Limiting the sourcing of EVs and components from China could hinder EV adoption, according to Jonas. 

“It is also inflationary, in our view,” he said. 

He also expects traditional automakers to shift their focus back to combustion vehicles and hybrids as they evaluate the economics of their EV initiatives.

Tesla’s Potential: Despite these challenges, Jonas believes Tesla can address these issues. He also emphasized considering other aspects of Tesla’s business, such as Dojo and licensing opportunities.

Price Action: On Monday, Tesla shares closed 0.55% higher at $251.60 in the regular trading session, according to data from Benzinga Pro.

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