Berenberg: Tesla's Competition 'A Myth'

There’s been plenty of negative sentiment surrounding Tesla, Inc TSLA in 2018, but one Wall Street analyst said Monday that long-term investors should ignore the noise and hang on for the ride.

The Analyst

Berenberg analyst Alexander Haissl reiterated a Buy rating on Tesla with a $500 price target.

The Thesis

Fears over competition from legacy Detroit automakers are overblown, Haissl said in the note. (See his track record here.) 

Traditional automakers pose no serious threat to Tesla, the analyst said — and the Big Three automakers face a dilemma in that they must prove to customers that their electric vehicles are competitive with their internal combustion engine models in both price and performance.

OEMs’ EVs are priced at roughly an 80-percent premium to internal combustion counterparts, Haissl said. 

Tesla’s driving ranges and vehicle efficiencies are well ahead of the competition, he said. 

“EPA figures for the Audi e-tron and Mercedes-Benz EQC have not been released, but we estimate that the EPA range could be 200-220 miles, which compares to the Model X at 29 5miles for the 100D and 237 miles for the 75D." 

Berenberg estimates the Model X’s energy efficiency is about 25 percent better than premium OEM electric SUVs.

Tesla’s valuation, particularly compared to other legacy automakers, will continue to be hotly debated on Wall Street, Haissl said. Yet the market is likely underestimating the extent of Tesla’s technological advantages, and the long-term upside for Tesla stock could be well above Berenberg's $500 price target, the analyst said. 

Price Action

Tesla stock was down 0.77 percent at $258 at the time of publication Monday and is down 25.5 percent in the past year.

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Model X photo courtesy of Tesla.