Nomura hiked its Tesla target price to US$450 from US$420 after turning more positive on Model 3 gross margins after a company meeting and the shareholder meeting last week. It kept a Buy call.
“We believe Model 3 average selling prices are coming in above forecast due to stronger-than-expected demand for all-wheel-drive and performance configurations,” it said in a note last week. The blended Model 3 ASPs should approach US$60,000 in the second half of the year, it estimated.
Nomura also said it expected long-range battery SKU costs to decline.
“We believe that Tesla can lower per unit costs considerably in the coming months, driven by improved fixed cost absorption and higher
labor efficiency,” it said.
Nomura added that it expected stronger Model S and X deliveries in the second half, which should further boost gross margin performance.
It forecast the automotive gross margin would rise to 25.6 percent in the fourth quarter, from 19.7 percent in the first quarter.
Tesla also reiterated that it would not need new capital this year, with the company running learner on spending and as organic cash generation would fund both the business and upcoming debt maturities, Nomura noted.
China also is Tesla’s biggest opportunity, Nomura said, with a local production facility likely unveiled soon.
Shares of Tesla were up 4.0 percent at US$330.37 at 10:51 P.M. SGT on Monday.