Tesla Inc (NASDAQ:TSLA) received a boost after German authorities gave approval to produce vehicles in Berlin, with analysts more confident about the target run rate of 2mln by the end of 2022.
The electric vehicle manufacturer expects its US$60,000 Model Y to be at the forefront of production at its first European 'gigafactory', with 10,000 of the SUVs being built at the plant each week.
Giga Berlin could ramp up to annual production of 500,000 Tesla vehicles, Wedbush analyst Daniel Ives said, putting Tesla on track to double its current production capacity as the new Austin factory also comes on line.
“We cannot stress the production importance of Giga Berlin to the overall success of Tesla's footprint in Europe and globally, as the current Rubik's Cube logistics of producing cars in China at Giga Shanghai and delivering to customers throughout Europe was not a sustainable trend”, the broker said.
“In a nutshell, we believe by the end of 2022 Tesla will now have the capacity/run rate for overall ~2 million units annually from roughly 1 million in 2021 with Berlin and Austin green-lighted to start production.”
But the company stressed supply-side headwinds would still prove a headache for Tesla, with excess demand leading to up to six-month delays for its Model Ys and some Model 3s, while chip shortages and Russia’s invasion of Ukraine are causing continued uncertainty to outlooks.
The group maintained its Outperform rating for Tesla shares following the news, maintaining a price target of 1,400p.
Tesla shares closed at 838.29p on Friday, a 0.12% fall over the day.