Investor's Corner
Tesla’s steadily-improving Model 3 production ramp is starting to win over Wall St.
True to Elon Musk’s words last month about the challenges Tesla faced during the Model 3 ramp, the company appears to be well on its way to leaving its self-imposed “production hell.” As Tesla’s Model 3 production shows more encouraging signs, Wall Street appears to be adopting an increasingly optimistic outlook on the electric car and energy company.
Amidst the noise surrounding Elon Musk’s tweets about the funding for Tesla’s possible privatization being secured, the company is steadily making progress in an area that matters a lot this Q3 — the Model 3 production ramp. Tesla is currently attempting to hit profitability this Q3, and being the vehicle expected to comprise most of Tesla’s electric car sales for the quarter, the Model 3 is key to this goal.
Tesla was finally able to hit its self-imposed target of producing 5,000 Model 3 per week during the final week of June. When the company released its Q2 production and deliveries report, some Wall St. analysts promptly expressed their doubts about the company’s capability to sustain the car’s optimum production rate. In the weeks that followed the release of the Q2 production and deliveries report, Tesla showed signs that it is capable of sustaining the optimum production pace of the Model 3. Hiring was ramped, more than 19,000 new Model 3 VINs were filed in a 2-week period, test drives for the Model 3 were started, and programs such as the 5-minute Sign & Drive delivery system were adopted. The Model 3’s sustained production was ultimately confirmed in the Q2 earnings call when Musk noted that Tesla was able to manufacture 5,000 Model 3 per week during “multiple weeks” in July.
Tesla has exhibited the same encouraging signs this August. Just recently, the company registered a record 16,000 new Model 3 VINs in a seven-day period — a feat that took the company roughly eight months to accomplish when it first started producing the electric car. Tesla appears to have begun initiatives to bring the Model 3 overseas as well, with viewings being scheduled for Australia and New Zealand. Even more recently, George Galliers of Evercore ISI, after a tour of the Fremont factory, released a note stating that Tesla is likely well on its way to achieving a steady weekly production rate of 5,000-6,000 Model 3 per week. The analyst even noted that despite the controversy over the company’s possible privatization, the fundamentals of Tesla’s operations are encouraging.
“Tesla seems well on the way to achieving a steady weekly production rate of 5,000 to 6,000 units per week. We are incrementally positive on Tesla following our visit. We have confidence in their production. We did not see anything to suggest that Model 3 cannot reach 6k units per week and 7k to 8k with very little incremental capital expenditure. Focusing on the fundamentals and setting aside talk of privatization, we are incrementally positive on Tesla following our visit.”
The Evercore ISI analyst is not alone in his optimistic outlook on Tesla, either. Sanford C. Bernstein analyst Toni Sacconaghi, who previously had a $265 price target for Tesla stock (NASDAQ:TSLA), recently raised his price target for the company to $325 per share. Sacconaghi is not even an avid supporter of Elon Musk, being one of the analysts who attracted the CEO’s ire during the now-infamous Q1 earnings call, where he asked what Musk described as “boneheaded” questions.
Jefferies Financial Group also lifted their price objective for Tesla from a conservative $250 to an optimistic $360 in a report issued last week. The firm also gave Tesla stock a “Neutral” rating. Berenberg Bank reissued a “Buy” rating for Tesla stock, placing a price objective of $500 for the company’s shares. JPMorgan Chase & Co., which still has a “Sell” rating on TSLA, raised its price target to $308, a significant increase from its previous price target of $195.
While Tesla stock remains a battleground between the company’s supporters and critics, Wall Street seems to be showing signs that it is starting to adopt a more optimistic stance on the electric car maker. If the company’s new price targets from Wall Street are any indication, it appears that even firms that have been critical of Tesla are starting to recognize and acknowledge the progress the electric car maker is making. If Tesla nails its Model 3 targets this Q3 by sustaining the vehicle’s production at a rate of 5,000 units per week or more, Elon Musk’s vision of a profitable Tesla might actually come true.
As of writing, Tesla stock is trading up 0.51% at $340.43 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Tesla received a price target boost from Morgan Stanley, according to a new note on Monday morning, but there is some considerable caution also being communicated over the next year or so.
Morgan Stanley analyst Andrew Percoco took over Tesla coverage for the firm from longtime bull Adam Jonas, who appears to be focusing on embodied AI stocks and no longer automotive.
Percoco took over and immediately adjusted the price target for Tesla from $410 to $425, and changed its rating on shares from ‘Overweight’ to ‘Equal Weight.’
Percoco said he believes Tesla is the leading company in terms of electric vehicles, manufacturing, renewable energy, and real-world AI, so it deserves a premium valuation. However, he admits the high expectations for the company could provide for a “choppy trading environment” for the next year.
He wrote:
“However, high expectations on the latter have brought the stock closer to fair valuation. While it is well understood that Tesla is more than an auto manufacturer, we expect a choppy trading environment for the TSLA shares over the next 12 months, as we see downside to estimates, while the catalysts for its non-auto businesses appear priced at current levels.”
Percoco also added that if market cap hurdles are achieved, Morgan Stanley would reduce its price target by 7 percent.
Perhaps the biggest change with Percoco taking over the analysis for Jonas is how he will determine the value of each individual project. For example, he believes Optimus is worth about $60 per share of equity value.
He went on to describe the potential value of Full Self-Driving, highlighting its importance to the Tesla valuation:
“Full Self Driving (FSD) is the crown jewel of Tesla’s auto business; we believe that its leading-edge personal autonomous driving offering is a real game changer, and will remain a significant competitive advantage over its EV and non-EV peers. As Tesla continues to improve its platform with increased levels of autonomy (i.e., hands-off, eyes-off), it will revolutionize the personal driving experience. It remains to be seen if others will be able to keep pace.”
Additionally, Percoco outlined both bear and bull cases for the stock. He believes $860 per share, “which could be in play in the next 12 months if Tesla manages through the EV-downturn,” while also scaling Robotaxi, executing on unsupervised FSD, and scaling Optimus, is in play for the bull case.
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Meanwhile, the bear case is placed at $145 per share, and “assumes greater competition and margin pressure across all business lines, embedding zero value for humanoids, slowing the growth curve for Tesla’s robotaxi fleet to reflect regulatory challenges in scaling a vision-only perception stack, and lowering market share and margin profile for the autos and energy businesses.”
Currently, Tesla shares are trading at around $441.
Tesla bear Michael Burry got blunt with his beliefs over the company’s valuation, which he called “ridiculously overvalued” in a newsletter to subscribers this past weekend.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry, who was the inspiration for the movie The Big Short, and was portrayed by Christian Bale.
Burry went on to say, “As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”
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For a long time, Burry has been skeptical of Tesla, its stock, and its CEO, Elon Musk, even placing a $530 million bet against shares several years ago. Eventually, Burry’s short position extended to other supporters of the company, including ARK Invest.
Tesla has long drawn skepticism from investors and more traditional analysts, who believe its valuation is overblown. However, the company is not traded as a traditional stock, something that other Wall Street firms have recognized.
While many believe the company has some serious pull as an automaker, an identity that helped it reach the valuation it has, Tesla has more than transformed into a robotics, AI, and self-driving play, pulling itself into the realm of some of the most recognizable stocks in tech.
Burry’s Scion Asset Management has put its money where its mouth is against Tesla stock on several occasions, but the firm has not yielded positive results, as shares have increased in value since 2020 by over 115 percent. The firm closed in May.
In 2020, it launched its short position, but by October 2021, it had ditched that position.
Tesla has had a tumultuous year on Wall Street, dipping significantly to around the $220 mark at one point. However, it rebounded significantly in September, climbing back up to the $400 region, as it currently trades at around $430.
It closed at $430.14 on Monday.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
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