Tesla Motors (TSLA) spent the last months of 2013 talking about fires, potential recalls and other subjects it most likely would have preferred to avoid. Now, it seems to have put the conversation back on its growth.
AFP/Getty Images Remember, earlier this week Tesla said it had delivered more cars than it had expected during the fourth quarter, while Elon Musk said the upstart automaker was looking to sell 800 cars a week by the end of 2014. The breathless commentary soon resumed, with Morgan Stanley wondering aloud if cars were just a springboard to something bigger for Tesla.
One thing could be standing between Tesla and those dreams of massive success: Rechargeable batteries, which are expensive and hard to come by. Wedbush’s Craig Irwin and Min Xu believe the latter part of that equation could be about to change. They write:
We believe the recent constraints that Panasonic's available production capacity have presented are likely to be resolved by 2H14 when shuttered capacity is likely to be re-commissioned to produce batteries for Tesla. The cost-out roadmap of a mid- to high-single-digit percent reduction in annual battery costs should support a continued tailwind for 2014 Model S gross margins…
We see strong positives in Tesla’s credible path to longer-term battery cost reduction and the Gen-III vehicle target costs, and what we believe will be a receptive buying public willing to purchase EV’s while retaining reasonable expectations for these vehicles. Tesla’s multi-year lead over credible competition
suggests the company is well positioned to deliver an aggressive volume ramp.
Shares of Tesla have dropped 0.8% to $169.66 today at 2:13 p.m., but have gained 16% this week.
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