Tesla (TSLA) is set to officially open its new factory near Berlin on Tuesday, as it establishes a manufacturing footprint in Europe. Tesla stock headed for a fifth straight advance on Monday.
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“This removes a major overhang on the stock over the past few months.” wrote Wedbush analyst Daniel Ives in a note to clients Monday. “The red tape and headaches seen around the delays/disputes opening up this flagship European factory has been frustrating for investors to watch unfold as many on the Street were doubting if Giga Berlin ever actually would open.”
The opening of Giga Berlin should improve production bottlenecks in China for deliveries throughout Europe. The Berlin factory has the potential to expand production to about 500,000 vehicles annually. Tesla’s Model Y SUV will be the first to roll off the assembly lines in the next 12 to 18 months.
“With the race for electrification in Europe hitting another gear and competition for EVs increasing from every angle with VW among others doubling down on its EV ambitions, we view Giga Berlin as a major competitive advantage for Tesla to further build out its supply footprint in this key region,” Ives said.
Still, Tesla has signaled previously that it would ramp up production slowly at its Berlin and Austin plants. The Berlin plant is not entirely finished, which could limit output.
Tesla Stock On Upswing
Shares rose 1.7% to 921.16 on the stock market today. Tesla stock on Friday reclaimed its 50-day line on Friday for the first time since mid January, amid a rotation away from growth stocks in recent months.
Tesla stock, a Leaderboard stock, has regained support at its 200-day and 50-day moving averages, but still offers no immediate buy point.
Its relative strength line has spiked up, but is still well off its peak. Tesla’s RS Rating is 91 out of a best possible 99. Its EPS Rating is 74.
Among other U.S.-based EV makers, Lucid (LCID) fell 1.7% and Rivian (RIVN) tumbled 5%.
Stocks of American automakers with growing EV slates were also down on Monday. General Motors (GM) fell 2.7%, while Ford (F) declined 2.25%.
Tesla’s China-based rivals Nio (NIO) fell 2.9%, Xpeng (XPEV) lost 5% and Li Auto (LI) plunged 6.6%. Warren Buffett-backed BYD (BYDDF) fell 3.5%.
Supply-Chain Woes Hamper Production
Customers who ordered Model Ys and Model 3s are currently waiting up to 6 months for vehicle deliveries. Ramping up production at Tesla’s factories in Austin and Berlin would cut delays, Ives says. That could lift Tesla stock.
However, the chip shortage remains a moderating issue for Tesla and the global auto industry into the rest of 2022, he adds. Additionally, Russia’s war in Ukraine and its broader impact in Europe are worrisome.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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