Tesla Stock Price Target Hiked To Street High As House Eyes New EV Credits

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. appears poised to vote on a reconciliation bill that includes EV credits for Tesla and other EV makers. Tesla stock closed higher on Thursday, while other EV stocks slumped.

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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 is 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.

Tesla Stock

Shares edged up 0.7% to 1096.28 on the stock market today. Tesla stock is up 6% so far this week, after falling 15% last week after CEO Elon Musk began selling 10% of his stake in the company.

TSLA stock is in profit-taking zone, after racing past a 900.50 cup-base buy point, according to MarketSmith chart analysis.

Meanwhile, other EV stocks have slumped in recent days. Lucid (LCID) fell 10.5% on Thursday, adding to its 5.4% decline the day before. Fisker (FSR) dropped 6.2%.

Recent IPO Rivian (RIVN) tumbled 15.5% to 123.38, after falling 15% on Wednesday, following a five-day surge post-IPO.

Among other U.S.-based automakers with a growing EV slate, General Motors (GM) fell 3.5% and Ford (F) was down 2%.

China-based rivals Nio (NIO) lost 3.2%, Xpeng (XPEV) was down 2% and Li Auto (LI) fell 3.7%.


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EV Credits

The House is slated to vote on 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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