It’s been a wild ride for Tesla Inc. recently, but production of the Model 3 sedan -- a previous point of concern -- is going swimmingly.
Output of the more mass-market vehicle, a key plank in Chief Executive Officer Elon Musk’s plan to become profitable, is on track and an 8,000 a week production rate is “well within reach,” despite extra spending demands, Evercore ISI analysts George Galliers and Arndt Ellinghorst wrote Thursday in a note. Their report came after a site visit at the company’s Fremont, California, plant this week.
In more of a mixed report on the automaker, Bernstein analyst Toni Sacconaghi raised his target price to $325 from $265, saying the chances Tesla will go private are less than 50%.
Tesla produced more than 5,000 Model 3s in the last week of June, working around the clock to hit the mass-manufacturing milestone. The push also included assembling vehicles in a tent outside its factory, raising questions on the carmaker’s ability to sustain that rate and keep up quality standards.
“We are incrementally positive on Tesla having just returned from a 48-hour trip to Tesla’s Fremont facility,” the analysts wrote, after completing three separate tours at the site. “Tesla seems well on the way to achieving a steady weekly production rate.”
The analysts saw nothing that would suggest Tesla isn’t able to produce 5,000 Model 3 cars per week currently and increase that by 1,000 per week “very shortly.”
Evercore forecast Model 3 production of 123,000 vehicles during the second half of the year, but the analysts said they may need to boost that by as much as 7 percent after the tours.
Tesla shares rose 1.1% to $342.50 at 8:30 a.m. in New York before regular trading.
By Elisabeth Behrmann, with assistance from Esha Dey