There’s a lot of future potential baked into Tesla’s stock price, but many stock pundits believe it’s headed even higher. Jefferies analyst Dan Dolev recently raised his price target for TSLA to $365.00, based on his belief that the company will be successful at lowering battery costs, and that this will improve its gross margins.
“Lowering battery cost via changes to cell chemistry and Gigafactory scale benefits are critical determinants of Tesla’s ability to sell an affordable Model 3 starting at $35K,” Dolev wrote. “Our detailed battery component cost analysis details a path to 50%+ reduction in battery pack cost to $125/kWh by 2020.”
Dolev points out that Tesla’s estimated $250/kWh current battery pack cost represents about 20% of the average price of a Model S. “Our analysis demonstrates that Tesla can reduce its battery pack cost from 21-22% of average sales price to 12-13%, helping Tesla achieve a vehicle gross margin at the upper end of peer OEM levels (33% for Models S/X and 23% for Model 3).”
Dolev has delved into the technical details: “Our analysis details a potential path to a 30% cell-level cost reduction to ~$88/kWh by using a more efficient lithium-rich nickel cobalt manganese cathode (vs. NCA), doubling the percentage of silicon in the synthetic graphene anode, replacing the liquid electrolyte with an ionic gel electrolyte which eliminates the need for a separator, and using a water-based electrode solvent for the cathode.”
Source: Street Insider