A rare Tesla Motors Inc. bear emerged Wednesday, with Lux Research expressing doubt that the electric-car maker will sell as many cars as it hopes by the end of the decade, which would result in overcapacity at its pricey battery factory and affect sales of its mass-market EV.
Not that investors cared that much about that bearish stance: Tesla shares TSLA, -0.81% hit a fresh intraday high of $288 earlier Wednesday, although they turned lower at midmorning. Tesla closed at a record $284.80 on Tuesday, the latest in a string of all-time highs.
The “gigafactory” poses “tremendous risk for Tesla and its partner Panasonic,” said Lux, adding that the company’s goal of 500,000 cars is unlikely to come to pass.
“This half-million number is slightly higher than the [electric vehicle] sales we expect that all auto makers combined will be able to sell in 2020,” Lux said. The more likely scenario is Tesla sales of around 240,000 cars at the end of the decade, Lux said.
Moreover, the gigafactory will bring about only a modest reduction in battery costs, and create the dreaded overcapacity, the analysts said.
Tesla and Panasonic will then face a chicken-and-egg problem. The gigafactory is likely to reduce the cost of the mass-market Model 3’s only by $2,800, not enough to sway the success of the planned lower-cost electric vehicle, Lux said.
Lux’s note comes a day after analysts at Stifel Nicolaus raised their Tesla stock rating to buy with a price target of $400 — the highest price target among Tesla analysts, according to FactSet.
Tesla has gained 87% so far this year, about 10 times the percentage rise of the S&P 500 Index. SPX, -0.05%
The recent share rally follows upbeat second-quarter results, which included news it was on target to achieve an annual rate of production of 100,000 by next year, and deeper inroads in China.