Analyst Says Batteries Are Almost The Sole Driver of Tesla's Stock

Canacoord analyst Jed Dorsheimer argued that Tesla is several years ahead of the competition because of their advanced battery technology. He went as far as to say that his decision to rate Tesla’s stock highly had everything to do with their batteries. He also was impressed by Tesla’s ability to sell their Powerwall products to put on customers’ homes.

Examining Dorsheimer’s claims

Dorsheimer is right that many of Tesla’s successes can be attributed to their battery production. The argument could be made that it’s 100% because a car can’t run without a battery. However, Tesla has been able to put every aspect together. There are other cars out there that rival or beat Tesla in speed or interior materials. However, Tesla’s speed can’t be beat by all that many cars. Recently a Tesla Model 3 beat a Porsche Taycan in a race. If Tesla was a house, then the battery successes may be the foundation. Tesla autonomous driving technology and driving experience would be the wooden beams or the décor.

Battery production to take off

Dorsheimer is not the only one who knows that battery demand will go up. The battery industry that goes with EV’s is expected to be worth $8 billion by 2025. According to Dorsheimer, Tesla prioritized quality over quantity in their battery endeavors.

Other analysts don’t all agree with Dorsheimer

Other analysts believe Tesla’s stock will drop. The average price target shows there could be around an 8.02% decrease in Tesla’s stock.

Tesla made crucial decisions

Some are saying that Tesla made a crucial decision back in 2017. Tesla changed their name from Tesla Motors to Tesla back in 2017. It’s hard to know exactly how much this move would have affected the company. Buyers recently expressed that they buy Teslas because of the quality of the cars and not because of Elon Musk. While the buyers are being truthful in their responses, there’s no doubt that the brand name plays a factor.

Tesla’s Former CTO

Tesla has an e-waste expert named JB Straubel who has been behind many recycling efforts with Tesla’s batteries. CNBC recently did a news segment on how Tesla plans to tackle the issue of rising battery demand. One of the most important things that is noted in this segment is how Tesla is trying to cut down on the mining of lithium. It would serve Tesla well to be more outwardly transparent about the amount Lithium they are mining. This would help Tesla further separate itself from a vehicle that runs on petrol.

Check out this article on how electric trucks can be more cost efficient and emit less than diesel trucks.

Dissecting Tesla’s formula

Tesla’s strategy has been to scale up production of batteries by re-using materials. Tesla also wants to try to re-sell the materials to save even more money. Tesla has also put a significant amount of money into testing autonomous driving technology. The value of having good batteries is something Tesla relies upon. However, it will continue to be debated whether it’s the only driver of Tesla’s success. One could argue Tesla wouldn’t be able to invest as much money into other projects without having battery technology they can afford and they would be right. The issue is that saying batteries are the only key to Tesla getting a good buy rating in the stock market downplays the other aspects of the car. For example, there have been many cars throughout history where powerful engines were put into subpar vehicles.

Image:Tesla

Daniel Cappo reports Tesla developments at Torque News. He has had a passion for cars ever since age five when his grandparents let him drive their old golf cart around their property in Upstate NY. He has attended numerous auto shows, and even got the chance to drive a Ferrari California on the track. Ever since Tesla opened up a dealership at his local mall, he's been an avid follower of their cars and technology. Dan has a B.S. in Public Communication from U Vermont. Follow Daniel on Twitter and LinkedIn for daily Tesla News.