Wedbush Securities analyst Dan Ives on Thursday boosted his Tesla (TSLA) -) price target to $350 from $310, arguing in a note that the electric-vehicle producer is on track to reach a $1 trillion market cap in 2024.
The boost comes toward the end of another volatile year for Tesla that nonetheless saw the company's stock more than doubling (up 105% as of the Dec. 22 close).
The bear narrative for Tesla, according to Ives, centers on a reduction in electric-vehicle demand as competition in the sector sharpens.
Related: Here's the major production problem limiting Tesla's Cybertruck scalability
But Musk's decision to cut prices throughout the year, bringing the average price of a Tesla down more than 20%, was a "poker move for the ages," according to Ives, catalyzing volume growth.
The backdrop of CEO Elon Musk's 2023 price cuts, however, was a year that saw softening growth for EVs. Though the year is set to notch another record for EV adoption, the growth rate of that adoption has been cut nearly in half.
Global passenger EV sales grew 60% between 2021 and 2022. The growth rate between 2022 and 2023, assuming the expected 14 million EVs are sold, is set to land at 34%.
While Ives acknowledged that softening in demand, he contended that "we are still in the early days" of the electric transition.
He predicted that by 2030 about 20% of cars will be EVs.
And with legacy automakers like General Motors (GM) -) and Ford (F) -) slowing their investments in EVs, Ives said Tesla will lead the way through that coming transition to full electrification.
Ives expects Tesla's year-over-year unit growth to rise between 25% and 30%, achieving between 2.2 million and 2.3 million units, above the 1.8 million units Tesla is on track to produce this year.
Ives additionally says that Tesla's profit margins — which have crumbled throughout the year due to the company's dedicated price cuts — have bottomed and "should move back above the key 20% threshold during the course of 2024."
Related: Here's the full story behind electric vehicle adoption
Tesla as a tech play
Ives added that Tesla's Full-Self-Driving (FSD) capabilities represent another "incremental value driver" in the Tesla growth story.
Still, the company recently agreed to send an over-the-air software update to address an issue identified by auto-safety regulators that made Tesla's self-driving technology too easy for drivers to misuse.
The company's tech, which requires the hands-on, eyes-on attention of its drivers, is currently at a Level Two designation, which requires constant driver attention. Experts have said that Musk's aversion to using Lidar as a necessary backup to his system will prevent Tesla's FSD from becoming robotaxi-capable.
Over the next 12 to 18 months, Ives said, Tesla's FSD and its Supercharger network combined are valued at an additional $75 per share.
The next phase of the company's growth story, Ives said, is about to begin.
"We view Tesla where Apple was in the 2008/2009 period as Cupertino was just starting to monetize its services and golden ecosystem with [Wall Street] not seeing the broader golden vision at the time," Ives said.
Shares of Tesla closed up 3% Thursday at $254.50 but dropped 0.8% on Friday to $252.54. The company has a market cap of around $800 billion.
Contact Ian with tips via email, ian.krietzberg@thearenagroup.net, or Signal 732-804-1223.
Related: What's stopping Tesla from achieving Level 3 self-driving
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