Promising Signs For Tesla Stock
Tesla Energy is still a small part of Tesla overall but it might not stay this way for long. Baird analyst Ben Kallo has picked Tesla as his #1 stock pick for 2017 saying the ramp of Tesla Energy and Model 3 will exceed expectations in 2017. That might seem like a stretch for investors who have remained skeptical about the company’s ability to achieve its lofty goals.
But there are promising signs already. As Tesla has become a more focused company, probably after learning from its past failures. The progress at the Gigafactory has been astonishing due to technological advancements. Tesla’s powerpacks are assembled using imported versions of the 2170 cell format that the company jointly designed with Panasonic. The result is that Tesla is now able to deploy energy storage projects in record time. For instance, its California energy-storage project would ordinarily have taken years to complete, but ended up taking just four months.
Also Read: Buy Tesla Motors Inc (TSLA) Stock Now Or Regret It Later
The construction of the Gigafactory itself has actually exceeded targets. Temporary exterior walls are rapidly repositioned to accommodate new sections, which allowed the factory to double in six months. It’s not inconceivable that the factory will be fully complete in the next 24 months.
Tesla Motors Inc (NASDAQ:TSLA) has also fulfilled its promise to roll out software upgrades to cars equipped with the new Autopilot hardware. Building cars are certainly harder than producing lithium-ion batteries. But Tesla’s radical approach to manufacturing cars might eventually prove to be a winner. Car manufacturers prefer using a lean manufacturing model where they simply manage their far-flung supply chains instead of trying to hold inventory which is costly.
Tesla, on the other hand, has adopted a vertically-integrated manufacturing model where it will control much of the supply chain instead of giving up control to third-parties. Other than manufacturing its own batteries, Tesla has managed to build an extensive supercharger network thus giving it a big advantage over rivals such as General Motors Company (NYSE:GM) and Toyota Motor Corp (ADR) (NYSE:TM) whose EV customers have to rely on the much slower ChargePoints.
Tesla is still running things very much like a startup, but this is probably what it takes to disrupt the huge traditional auto industry.
Investor Takeaway
Tesla has accomplished an important milestone by activating its Gigafactory battery production plant. Although this has breathed some life into TSLA stock, the best gains will come if the company can meet its target to start production of Model 3 later in the year. There’s a good chance the company will be able to meet this milestone as well, so now might be a good time to build positions in TSLA stock.
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The article Tesla Motors Inc (TSLA) Hits Rare Home Run After Activating The Gigafactory originally appeared on amigobulls.com. Watch our analysis video on TSLA.
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