RBC upgrades Tesla to outperform, says automaker can fend off competition for years to come

Tesla will be able to maintain its leadership status in electric vehicles throughout the decade, according to RBC Capital Markets. Analyst Joseph Spak upgraded Tesla to outperform from market perform, saying in a note to clients on Sunday evening that the electric automaker should be able to fend off competitors long term due to its supply chain investments. “As EVs enter their 3rd phase (everyone has EVs out there) in the mid-to-later part of the decade, we believe being able to deliver EVs will increasingly depend on supply chain,” Spak wrote. “While TSLA is fairly secretive about the deals they have cut for supply of raw materials, in talking to contacts we believe they have done more than other OEMs. The company’s early focus on vertical integration (not just batteries/raw materials but also motors, semis, software) is likely to pay off.” In the near term, expectations have declined enough for Tesla to potentially beat them and give the stock a boost. “We believe the buyside expects a ~250k print effectively in line with our new 249k forecast. With investors primed for lower deliveries, we believe 2Q22 margins can surprise to upside,” Spak wrote. Shares of Tesla have dropped 34% year to date, as investors have shifted away from risk assets. Tesla has also been hurt by the Covid shutdowns in China, a key market for both productions and sales for the automaker. RBC did trim its price target on Tesla to $1,100 from $1,175. The new target is roughly 58% above where the stock closed on Friday. — CNBC’s Michael Bloom contributed to this report.

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