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Tesla skeptic changes tune on Model 3 battery costs: ‘TSLA remains ahead of the pack’

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Longtime Tesla skeptic UBS appears to be carrying a perspective on the automobile maker. In a recent notice, UBS analyst Colin Langan raised his price target for Tesla stock (NASDAQ:TSLA) by a conservative $190 to some more optimistic $230, mentioning the Model 3’s battery cost advantages over competitors currently available in the marketplace.

The UBS analysts, with a bunch of engineers, analyzed batteries out of Panasonic/Tesla, LG Chem, Samsung SDI, and Contemporary Amperex Technology (CATL). According to the group ’s investigation, the Model 3’s batteries, that are made at the Gigafactory 1 at NV, are around 20 percent more cost efficient compared to LG Chem’therefore batteries, that are the second-best from the list. The UBS analysts estimated that Tesla’s batteries currently cost $111 each kWh, which will be approximately $37 a kWh less costly than LG Chem’so batteries, its nearest competitor.

In what could be called a admission of miscalculations before, UBS analyst Colin Langan, that has always given TSLA a “Sell” evaluation, noted that the company currently believes that competitions from recognized automakers would probably be less profitable than the electric automobile maker from the EV industry.

“Contrary to our team’s previous opinion, they now believe incumbent OEMs won’t be as profitable than Tesla at EV space. Tesla’s cost advantage could be corrected (at least briefly ) since other OEMs won’t switch to cheaper NCA chemistry. We continue to believe that TSLA remains ahead of the bunch when it comes to EV tech,” the analyst noted.

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Based on Tesla’s reduced cost battery and contemplating non-zero emission electric vehicle credits, the UBS analyst also boosted his fiscal 2019 earnings per share estimate to the electric automobile maker by $5.85 to $3.55, according to The Fly. Maintaining his stance on the company Langan nevertheless claimed a “Sell” score on Tesla, using a price target of $230.

While the fiscal company stays particularly doubtful about Tesla as evidenced by Langan’s constant “Sell” evaluation, UBS’ admission of the Model 3’s battery cost advantages might well signify a change in Wall Street’s general perception of the electric automobile maker. Together with a vote of confidence from Zacks Investment Research at the form of a “Strong Buy” rating after Tesla’s release of its third quarter earnings, Tesla’s capability to maintain profitability in the upcoming quarters is now beginning to seem incredibly workable.

Elon Musk mentioned that Tesla could have cash flow and a positive net income from the quarter, and in all quarters going. Musk even remarked that in times when Tesla must conduct obligations, the business should display a cash flow that was flat.

“We expect to have net income and cash flow in Q4. And I believe that our aspiration is something which will be for all quarters. I think we could be positive cash flow and profitable for all quarters where individuals may have to do a significant repayment but — for instance, in Q1 next year. But I think even in Q1, I think we could be flat in cash flow ” Musk stated.

Behind those predictions lies Tesla’s battery technology, that continues to improve over time. According to President of Automotive Jerome Guillen, Tesla’s batteries are always in a condition of improvement. Consequently, while UBS’ evaluation has concluded that the Model 3’s batteries will be the very best in the current market, Tesla’s batteries at the coming months would probably demonstrate an even wider gap within its competitors.

“We are advancing the design of their mobile. The plan of the mobile is not frozen. It evolves, and we’ve got a great roadmap of technology advancements to the next several years,” Guillen explained.

Disclosure: I don’t have any ownership in stocks of TSLA and don’t have any plans to commence any places over 72 hours.

The article Tesla skeptic changes tune on Model 3 battery prices: ‘TSLA remains before the bunch ’ appeared initially on TESLARATI.com.

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