Lux Research sees the electric vehicle (EV) opportunity as set to expand, considering the leading battery developers such as Panasonic are driving down the prices of lithium-ion (Li-ion) by 35% to $172 per kilowatt-hour (kWh) in 2025. However only the best-in-class players will achieve that cost threshold while others lag at $229 per kWh.
A key point made in the report was that in 2025, a disruptive Li-rich NMC (magnesium, nickel, cobalt) would bring in cost gains of $17 per kWh over conventional NMC/graphite cells. While scale-up efficiencies like Tesla’s Gigafactory remain a key strategy, geographical location and technology like high-voltage cathodes are also key factors.
At the same time, the competitive gap is widening. Technological innovation and scale are helping leaders like Panasonic, in partnership with Tesla, widen their competitive advantage. While Panasonic-Tesla and China’s BYD will achieve $172 per kWh and $211 per kWh at the pack levels, respectively, the Nissan-AESC partnership risks falling behind at $261 per kWh unless it changes technologies and production strategies.
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Cosmin Laslau, Lux Research Senior Analyst, said:
High battery prices have led to some huge missed opportunities in the electric vehicle market. Now if developers can drive down prices to $200/kWh or less at the pack level, they have a chance of selling millions of EVs by the mid- to late-2020s, and reap great revenues.
A few analysts have recently weighed in on Tesla:
- CLCSA reiterated a Sell rating.
- Stifel reiterated a Buy rating with a $400 price target.
- Evercore ISI reiterated a Buy rating.
- Zacks downgraded Tesla to a Sell rating from Hold.
In terms of sales, Tesla’s most recent forecast, as stated in its quarterly earnings report:
In Q2, we expect to produce about 12,500 vehicles, representing a 12% sequential increase. We plan to deliver 10,000 to 11,000 vehicles in Q2, and we are still on track to deliver approximately 55,000 Model S and X cars in 2015. As part of our strategy to optimize operational efficiency while scaling for higher deliveries, we are shipping cars using less expensive rail, rather than by truck, to more regions in the United States and Canada.
As a result of the earnings report and company guidance, Credit Suisse remains confident in the 55,000 unit guidance for fiscal 2015.
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Shares of Tesla were down 0.2% at $248.69 midday Tuesday. The stock has a consensus analyst price target of $269.11 and a 52-week trading range of $181.40 to $291.42.
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