Tesla could rally to $1,000 this year as demand from China remains strong and the global chip shortage subsides, Wedbush says

Tesla Model 3
Tesla Model 3

Tesla could roar higher in 2021 as demand looks strong so far and the global semiconductor chip shortage will only be a temporary setback for the EV giant.

That’s according to Wedbush’s Dan Ives, who has an “outperform” rating for the stock and price target of $1,000, a nearly 49% jump from current levels.

In a Monday note, the senior technology analyst noted three “perceived headwinds” that Tesla is facing right now: the chip shortage, political blowback in China from recent safety issues, and rising electric-vehicle competition around the globe.

As Elon Musk appeared on SNL, Lucid Motors, Ford, and Volkswagen all showcased their flagship eclectic vehicles in separate advertisements during the broadcast. But Ives said that Tesla remains the leader in the market, and underlying consumer demand looks robust in China and Europe.

“The main line in the sand now for the bulls and bears is not the near-term chip shortage in our opinion (which is temporary), but rather Tesla’s ability to further penetrate China,” Ives said. “Now it’s about Musk playing nice in the sandbox which appears to be happening over the last few weeks around safety issues and making sure that Tesla does not see any stumbles/government crackdown in China which is poised to represent 40%+ of global deliveries by 2022.”

The analyst estimated that Tesla appears to be able to comfortably exceed 200,000 delivery units in the second quarter, even factoring in the chip shortage. For the next few months, Ives is keeping an eye on Tesla’s Model Y production and demand, the Model S and X makeovers, and Tesla’s higher margin software and FSD (full self-driving) purchases.

Ives said he is still bullish on the EV sector despite the risk-off selling the industry has faced over the last few months. Shares of Tesla slipped 3% Monday morning to $651.59, and the EV giant is down over 5% year-to-date. Meanwhile competitors Fisker and Nikola are both down more than 23% in the same time period, and Lordstown Motors has tumbled 60% in 2021 amid short-seller reports.

Read more: Credit Suisse says buy these 15 stocks that represent its analysts’ ‘highest-conviction’ calls and are set to outperform despite the market’s doubts

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Tesla slips as report says the EV maker will idle Model 3 line at its Fremont factory for two weeks

FILE PHOTO: The Tesla factory is seen in Fremont, California, U.S. June 22, 2018. REUTERS/Stephen Lam
FILE PHOTO: The Tesla factory is seen in Fremont

Shares of Tesla slipped as much as 4% on Thursday after a report said the EV maker will idle the Model 3 line at its Fremont, California factory for two weeks.

Staff on the Model 3 line in Fremont were told production would be shut down until March 7 without an explanation, according to unnamed Bloomberg sources.

The workers were told they would be paid through the end of this week, but would not be paid through next week, and were advised to take vacation time if they had it.

Analyst Dan Ives of Wedbush Securities said the shutdown is most likely “chip shortage driven” in a note to clients Thursday morning. Ives said he was “not overly concerned” with the supply chain and factory disruption and argued it won’t change “the overall delivery trajectory for 1Q and 2021” for Tesla.

Automobile manufacturers have been facing a severe semiconductor shortage over the past few months.  

Semiconductors, also known as chips, are used in everything from cell phones to fighter jets, and rising demand caused by a 5G explosion, cryptocurrencies’ rise, the EV boom, and a number of other factors are leading to serious supply constraints.

Earlier this month the supply issues forced GM to shut down three of its plants, and Ford and GM are expected to lose roughly $4.5 billion due to the shortage.

Despite the shortage, Dan Ives said he still believes the “$5 trillion EV market over the next decade will have many winners around the globe especially with a Biden-driven green tidal wave on the horizon in the US.” Ives sees unit sales out of China driving the Tesla story going forward, instead of bitcoin or a chip shortage.

Still, Wedbush’s Chief Technology Strategist Brad Gastwirth said in a note to institutional investors that he believes the chip shortage will “last longer than what some may believe,” even with a $37 billion relief bill that could come out of Congress.

On Wednesday President Joe Biden said he would seek $37 billion in funding to help supercharge the US semiconductor supply.

“I’m directing senior officials in my administration to work with industrial leaders to identify solutions to the semiconductor shortfall,” Biden said. “Congress has authorized a bill but they need $37 billion to make sure that we have this capacity. I’ll push for that as well.”

Despite this push, Wedbush said they “do not see these actions improving near-term shortages or even creating an environment less susceptible to the current supply/demand imbalance.”

This bearish news for Tesla comes as the company continues to cut prices on vehicles across its lineup and around the globe (1) (2).

Tesla traded down 5.53% on Thursday as of 1:23 p.m. ET.

tsla chart
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Tesla slips as report says the EV maker will idle Model 3 line at its Freemont factory for two weeks

FILE PHOTO: The Tesla factory is seen in Fremont, California, U.S. June 22, 2018. REUTERS/Stephen Lam
FILE PHOTO: The Tesla factory is seen in Fremont

Shares of Tesla slipped as much as 4% on Thursday after a report said the EV maker will idle the Model 3 line at its Freemont, California factory for two weeks.

Staff on the Model 3 line in Fremont were told production would be shut down until March 7 without an explanation, according to unnamed Bloomberg sources.

The workers were told they would be paid through the end of this week, but would not be paid through next week, and were advised to take vacation time if they had it.

Analyst Dan Ives of Wedbush Securities said the shutdown is most likely “chip shortage driven” in a note to clients Thursday morning. Ives said he was “not overly concerned” with the supply chain and factory disruption and argued it won’t change “the overall delivery trajectory for 1Q and 2021” for Tesla.

Automobile manufacturers have been facing a severe semiconductor shortage over the past few months.  

Semiconductors, also known as chips, are used in everything from cell phones to fighter jets, and rising demand caused by a 5G explosion, cryptocurrencies’ rise, the EV boom, and a number of other factors are leading to serious supply constraints.

Earlier this month the supply issues forced GM to shut down three of its plants, and Ford and GM are expected to lose roughly $4.5 billion due to the shortage.

Despite the shortage, Dan Ives said he still believes the “$5 trillion EV market over the next decade will have many winners around the globe especially with a Biden-driven green tidal wave on the horizon in the US.” Ives sees unit sales out of China driving the Tesla story going forward, instead of bitcoin or a chip shortage.

Still, Wedbush’s Chief Technology Strategist Brad Gastwirth said in a note to institutional investors that he believes the chip shortage will “last longer than what some may believe,” even with a $37 billion relief bill that could come out of Congress.

On Wednesday President Joe Biden said he would seek $37 billion in funding to help supercharge the US semiconductor supply.

“I’m directing senior officials in my administration to work with industrial leaders to identify solutions to the semiconductor shortfall,” Biden said. “Congress has authorized a bill but they need $37 billion to make sure that we have this capacity. I’ll push for that as well.”

Despite this push, Wedbush said they “do not see these actions improving near-term shortages or even creating an environment less susceptible to the current supply/demand imbalance.”

This bearish news for Tesla comes as the company continues to cut prices on vehicles across its lineup and around the globe (1) (2).

Tesla traded down 3.28% on Thursday as of 11:09 a.m. ET.

Tesla chart
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