Tesla sustaining battery leadership and Model 3 has better gross margins

Analysts at investment bank Berenberg have a $500 price target for Tesla. Tesla is currently trading at $320.

* Original Equipment Manufacturers are not as threatening to Tesla because Tesla has technology advantages
* Tesla’s centralized, integrated, technology-driven architecture enables flexibility and OTA (over-the-air) software-upgradeability across the entire domain. Traditional architectures have legacy infrastructure, resulting in decentralized electronic control units (ECUs) systems that creates excess complexity and incompatibility
* Model 3 gross margin will be stronger than others expect. Model 3 will have better gross margin than the Model S and Model X
* lower labor content, as well as capital and material use efficiencies, should allow Tesla to comfortably achieve a margin above 25% throughout the product cycle
* Tesla will remain the battery leader. Tesla is not just the leader with lower battery costs, they also have temperature management which means better resilience to capacity degradation, and consequently better residual values.

Nextbigfuture has talked to owners of Tesla cars and owners of other electric cars. The other electric cars tend to have severe battery capacity degradation by the third year. Only Tesla has electric car batteries that last longer.

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