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Tesla's lead in batteries and software validated by staunch TSLA bear

(Credit: Tesla)

Tesla’s (NASDAQ:TSLA) work in its batteries and software recently received some validation from the unlikeliest of sources: a staunch TSLA bear. In a note to investors on Monday, Credit Suisse analyst and longtime skeptic Dan Levy admitted that Tesla holds a lead in electric vehicles, particularly in the development and production of batteries.

Yet, despite these positive points on the company, Levy maintained his “Underperform” rating and $200 price target on TSLA stock. This is quite an interesting stance for the analyst, considering that batteries and in-vehicle software are key components of vehicles in the electric era. This is proven by cars such as the Jaguar I-PACE, which is a well-made car that is bogged down by an average battery and software that does not seem to be optimized for the vehicle.

“While we hold an Underperform rating on Tesla, we nevertheless believe it’s important to give Tesla its credit where due. We believe Tesla is leading in the areas that will likely define the future of carmaking – software, and electrification,” Levy wrote.

With his “Underperform” rating and $200 price target, Levy stands as one of Wall Street’s staunchest Tesla critics. Prior to the analyst’s note, Tesla stock was trading at nearly $360 per share, which means that Levy was expecting the electric car maker to drop about 44%. This was despite having visited Gigafactory 1 in Nevada, a trip that, according to the analyst, was impressive.

“Tesla is likely ahead of others on batteries – the core of the electric powertrain,” the analyst said.

The Credit Suisse analyst further mentioned that last year, Tesla had a total of 44 GWh of battery capacity, with 35 GWh coming from Gigafactory 1 and another 9 GWh being imported from Panasonic. This level is nearly equal to all other carmakers in the market combined, which stood at 46 GWh. And with Gigafactory 1 becoming even more optimized, there is a good chance that Tesla’s dominance in battery capacity will only continue in the coming years.

These improvements are expected to be discussed in detail by Tesla in its upcoming “Battery and Powertrain Day.” The exact date for Tesla’s Battery and Powertrain Day has not been announced, but Tesla has hinted that the event will be held sometime in 2020. Such an event, Levy stated, can further emphasize Tesla’s advantage in the electric vehicle race.

“We expect Tesla to highlight why its work in battery gives it a clear competitive advantage vs. other automakers,” the analyst said.

Tesla stock is currently riding some momentum, opening this week with a show of force that saw the electric car maker’s shares rise as high as 7%. By the end of the day, TSLA stock was up 6.45% at $381.50 per share, likely due in part to progress in the company’s China ramp, as well as the ongoing preparations for Gigafactory 4 in Europe.

Tesla's lead in batteries and software validated by staunch TSLA bear
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