Tesla has been investing heavily in its much-delayed Model X crossover and the $5 billion Gigafactory. Both projects remain on track, according to two different reports. Pacific Crest Securities analyst Brad Erickson recently visited Tesla’s Fremont factory, and came out with encouraging details. The analyst said Tesla has dedicated 3-4 times more robots on its Model X production line compared to the Model S line.
Tesla on track to launch Model X in September
Factory activity suggests that Tesla will be able to launch the vehicle “on time.” Brad Erickson also noticed “several buses of new employees” being trained for the new line. Robotic production will likely make vehicles more standardized, leading to fewer faults in Model X. Pacific Crest Securities reaffirmed its Overweight rating on the stock with $293 price target.
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The Palo Alto-based electric vehicle maker is expected to launch the crossover sedan in September, and start shipments in early 2016. Tesla says the Model X has been designed with women in mind. While bears argue that Tesla won’t be able to sustain demand to support the Q4 production ramp, Pacific Crest said this scenario is unlikely. Model X pre-orders have surpassed 20,000, while Model S has seen a steady rise in demand.
Tesla’s Gigafactory to begin production within a year
Separately, a Nevada official said that the development of Tesla’s Gigafactory is well ahead of schedule. The massive battery factory will start battery production within a year. Gigafactory will be developed in phases, reaching its peak battery production capacity of 500,000 units by 2020.
Erickson said there was still a possibility of Model X being delayed by a few weeks. It may lead to a temporary weakness in the stock. He said it would represent a lucrative buying opportunity for long-term believers. Tesla aims to sell 55,000 vehicles in 2015. The company has already sold about 20,000 units in the first half of the year.
Tesla shares rose 0.84% to $270.50 at 11:58 AM EDT on Wednesday. The stock has rallied more than 44% in the last three months.