Wedbush analyst Daniel Ives raised his price target for Tesla (TSLA) stock to $1,400 from $1,000 in a note to clients late Thursday, as the U.S. House of Representatives on Friday passed a reconciliation bill that includes EV credits for Tesla and other EV makers. Tesla stock and other EV stocks rose on Friday.
Wedbush’s price target is the highest on Wall Street, along with the top end of Jefferies’ outlook.
Ives says the linchpin to the overall bull thesis on Tesla remains China. Wedbush estimates China will represent 40% of Tesla’s deliveries in 2022.
Ives added that Tesla is now “on a (roughly) 50k monthly run-rate for China into 2022.”
Tesla sold 54,391 China-made vehicles in October, including 40,666 for export, the China Passenger Car Association said. In September, Tesla sold 56,006 vehicles in China, of which 3,853 were exported. Tesla typically exports the bulk of its production in the first two months of the quarter.
Wedbush analysts estimate Tesla’s sales in China are worth $400 a share for 2022. Ives maintained his Outperform rating on Tesla stock. He recently lifted his bull-case price target to $1,800.
“The chip/component shortage remains a headwind for Tesla (and every other automaker). However we view this as a transitory issue with our core focus on Model 3/Y demand, which is outstripping supply by roughly 15% as of today,” Ives said.
Shares rose 3.7% to 1,137 on the stock market today. Tesla stock ended the week up 10%. It fell 15% the week before, after CEO Elon Musk began selling 10% of his stake in the company.
Recent IPO Rivian (RIVN) popped 4% to 128.60, after tumbling 16% each of the two days before. The pullback followed RIVN stock’s five-day surge post-IPO.
The House on Friday passed a massive tax-and-spending reconciliation bill Thursday that would include expanded tax credits, with Tesla and GM once again eligible.
The bill would grant up to $7,500 in tax credits for buying EVs, but those credits would increase by $4,500 if a vehicle’s final assembly occurs at a U.S. facility with unionized workers. That would only apply to GM, Ford and Chrysler, since their workers are unionized. It would exclude Tesla, Rivian, Lucid and all foreign automakers.
However, the Senate is likely to make significant changes to the reconciliation bill. That could include changes to the EV credits, including tougher caps on income and price tag limits as well as stripping out the union bonus. Final passage could be months away.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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