Tesla officially opened its new factory near Berlin on Tuesday, kicking off deliveries as it establishes a manufacturing footprint in Europe. CEO Elon Musk was on hand to deliver the first 30 Model Ys to customers. Tesla stock rose Tuesday, on track to rise for a sixth straight session.
"This removes a major overhang on the stock over the past few months." wrote Wedbush analyst Daniel Ives in a note to clients Monday. "The red tape and headaches seen around the delays/disputes opening up this flagship European factory has been frustrating for investors to watch unfold as many on the Street were doubting if Giga Berlin ever actually would open."
The opening of Giga Berlin should improve production bottlenecks in China for deliveries throughout Europe. The Berlin factory has the potential to expand production to about 500,000 vehicles annually. Tesla's Model Y SUV will be the first to roll off the assembly lines in the next 12 to 18 months.
"With the race for electrification in Europe hitting another gear and competition for EVs increasing from every angle with VW among others doubling down on its EV ambitions, we view Giga Berlin as a major competitive advantage for Tesla to further build out its supply footprint in this key region," Ives said.
Still, Tesla has signaled previously that it would ramp up production slowly at its Berlin and Austin plants. The Berlin plant is not entirely finished, which could limit output.
The Berlin plant is reportedly ready to make around 500 cars a week as it begins regular production, likely ramping up to 1,000 a week by the end of April. Tesla China is also expected to supply the Berlin plant with full 2170 battery packs until the new factory makes its own 4680 cells.
Tesla Stock On Upswing
Shares leapt 7.9% to 993.98 on the stock market today. On Friday, Tesla stock reclaimed its 50-day line for the first time since mid January.
Tesla stock, a Leaderboard stock, still offers no immediate buy point.
Its relative strength line has rebounded, but is still well off its peak. Tesla's RS Rating is 92 out of a best possible 99. Its EPS Rating is 74.
Among other U.S.-based EV makers, Lucid rose 5% and Rivian jumped 7.7%.
General Motors added 2.2%, while Ford rose 4.1%.
Tesla's China-based rivals Nio popped 7.45%, Xpeng rose 6.2% and Li Auto was up 3.8%. Warren Buffett-backed BYD rose 3,2%.
Supply-Chain Woes Hamper Production
Customers who ordered Model Ys and Model 3s are currently waiting up to 6 months for vehicle deliveries. Ramping up production at Tesla's factories in Austin and Berlin would cut delays, Ives says. That could lift Tesla stock.
However, the chip shortage remains a moderating issue for Tesla and the global auto industry into the rest of 2022, he adds. Raw material costs used to make Tesla batteries and other car parts have also skyrocketed. Tesla recently hiked prices to mitigate some of those increased costs.
Additionally, Russia's war in Ukraine and its broader impact in Europe are worrisome.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
