Tesla Motors Inc (TSLA) Shares Rally Post-Earnings

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Tesla Motors Inc NASDAQ:TSLA posted a slightly higher-than-expected profit last night, pleasing investors with results that were otherwise mostly in line with expectations. The automaker reported earnings of 2 cents per share, compared to Wall Street’s expectations of 1 cent per share in earnings.

Tesla (TSLA) still shows long term potential

The bull case on Tesla Motors Inc NASDAQ:TSLA continues to revolve around the electric vehicle maker’s long term potential, and last night’s earnings report hasn’t changed that for most analysts. In his post-earnings analysis, Deutsche Bank analyst Rod Lache maintained his Buy rating and $310 per share price target for Tesla.

He said Tesla’s margins were slightly weaker than he expected in the fourth quarter because of inefficiencies in manufacturing in connection with the company’s recent idling of the plant. Tesla idled its Fremont, Calif. plant so that it could upgrade the production line and increase the number of cars it can produce.

Tesla (TSLA) to benefit from mass EV adoption

Tesla Motors Inc NASDAQ:TSLA also said that it will launch the Model X a little later than management said previously. However, this news wasn’t much of a surprise because customers have been receiving confirmation emails suggesting that the vehicle won’t be launched until next fall. Nonetheless, Lache doesn’t think Tesla’s long term outlook has changed “materially.”

The analyst continues to believe that the cost of electric vehicles will be on par with traditional vehicles by early in the 2020s. As a result, he thinks mass adoption of electric vehicles is not far off. Additionally, he thinks Tesla is “positioned for significant advantages” as mass adoption comes about.

Tesla (TSLA) still faces production shortages

On Tesla Motors Inc NASDAQ:TSLA’s earnings call last night, CEO Elon Musk continued to state that they are seeing production constraints with no shortage of demand. The automaker now expects to sell 33,000 vehicles this year—a slight decline from the previous projection of 35,000. Because of this difference, analysts were asking about whether demand for the Model S is declining.

Musk added that while they have more levers they could pull to increase demand for their sedan, they aren’t pulling them because they can’t keep up with the demand they already have.

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