Tesla price target raised by Wedbush with tax credit and China taking focus

Tesla (NASDAQ: TSLA) had its price target at Wedbush raised to $225 from $200 on Monday morning, as analysts Dan Ives and John Katsingris believe new developments out of China, as well as the revised U.S. tax credit program that qualifies the Model Y’s entire lineup for the full amount, have resulted in “clear demand drivers” for the automaker.

After China was a notable headwind for Tesla in Q4 due to “macro uncertainty,” analysts at the firm are now indicating the EV reacceleration story in the region is “starting to hit its stride.” China was a weak point for Tesla in December as the automaker felt a significant drop in vehicle deliveries compared to November.

However, Tesla rebounded slightly in January, which gives Wedbush the impression that its ability to scale operations in China could be a distinct advantage against competitors.

Additionally, including the complete Model Y lineup in the list of qualifying EVs for the $7,500 tax credit gives Tesla “another lever” of demand for the all-electric crossover.

On Friday, the IRS reclassified the vehicle as an SUV, which shifted its MSRP limit from $55,000 to $80,000, qualifying the car for the total credit amount. After the Model Y’s inclusion, Tesla pushed prices up by $1,500.

“We could see some modest price increases over the coming months that gives more flexibility to Tesla with the tax credit now set,” Ives wrote in the note.

Based on the price cut moves by Tesla in both the U.S. and China, Wedbush believes the 1.8 million unit delivery bogey for the year could be easily surpassed by the automaker.

“It appears the trajectory so far is trending above that level out of the gates based on China and U.S. demand post price cuts.”

Finally, Wedbush added that Twitter’s “overhang” on Tesla shares should start to subside as the company is starting to stabilize financially from an advertising perspective. “The worries around Musk needing to sell more Tesla stock to fund Twitter losses has moved into the background,” the note states.

Last year, Tesla stock dropped over 60 percent, with losses during the second half of the year relating to Musk’s stock sale and general uncertainty regarding the CEO’s attention to Twitter and Tesla. However, Tesla has rebounded from the losses already in 2023, as it is up $75.74 so far this year.

Tesla stock opened at $193.02.

Wedbush pushed Tesla’s price target from $200 to $225 while maintaining its Outperform rating on the stock.

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x