New vehicle technology has been one of the stock market’s hottest trends this year. EV (electric vehicle) stocks, in particular, have caught investors’ imaginations, with several names providing mighty returns.
While out on Main Street, EV penetration is still in its early innings, Wedbush analyst Daniel Ives believes it is a trend that will only become more prominent as the decade progresses. The analyst says there is a “major inflection of EV demand globally,” and expects EV vehicles to ramp up from roughly “3% of total auto sales today to 10% by 2025.”
Whilst several companies will try to gain market share in the fledgling industry, Ives expects one company to benefit the most.
“We believe this demand dynamic will disproportionately benefit the clear EV category leader Tesla (TSLA) over the next few years especially in the key China region which we believe could represent ~40% of its EV deliveries by 2022 given the current brisk pace of sales,” the 5-star analyst said.
The far east superpower is already staking its claim to be at the forefront of the EV revolution and the past year has seen several companies - Nio, Xpeng, and Li - vying for market share, along with Tesla.
Ives believes sales in the region could “potentially double” over the next few years given the “pent-up demand for EV vehicles across all price points.”
While Tesla is in the process of expanding its global “manufacturing footprint,” with new factories set to be built in Berlin and Austin over the next year, China still “remains the ‘hearts and lungs’ of the Tesla demand growth story.”
Ives believes the latest data indicates “another strong month of December in China,” with the aim of delivering 500,000 models in 2020 still achievable.
For 2021, Ives expects over 40% growth, anticipating 710,000 deliveries, which should set “Tesla on a strong growth trajectory into 2022.”
Interestingly, despite the glowing assessment, Ives rates TSLA shares a Neutral (i.e. Hold). Meanwhile, his $715 price target indicates a potential upside of 10% from current levels. (To watch Ives’ track record, click here)
All in all, Street-wide caution circles the electric car giant, as TipRanks analytics model TSLA as a Hold. This boils down to 7 Buys, 11 Holds, and 7 Sells. With an average price target of $430.71, Tesla investors are in for a rude awakening in 2021, as the figure suggests downside of 33% over the next 12 months. (See Tesla stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.