While Tesla (TSLA) - Get Tesla Inc Report is being challenged by the worldwide chip shortage, a Wedbush analyst said Monday the electric vehicle maker's Berlin and Austin locations will significantly expand the company's global capacity.
Shares of Palo Alto company on Monday closed up 0.8% to $791.94.
Analyst Daniel Ives said in a research note that while the chip shortage has been a clear headwind for Tesla and the overall auto/tech industry, he believes building out manufacturing capacity globally remains a key to the company's success in 2022 and beyond, according to the Fly.
Cutting the red ribbon on Austin and Berlin over the coming months will markedly expand Tesla's global capacity with the green tidal wave underway and EV demand set to clearly accelerate over the next 12 to 18 months, Ives said.
CEO Elon Musk recently confirmed that Tesla is moving its headquarters from Fremont, Calif. to Austin, Texas, where the company has been constructing a new factory for a little over a year.
The company will continue to operate its electric vehicle factory in Fremont, CA, Musk said, and he plans to try and increase production there by 50%.
Musk, who already has begun living in Texas, has talked for many months about such a move. Tesla has a factory in Austin, and operations for his SpaceX firm are based there.
Meanwhile, Musk held a party at the new Berlin gigafactory on Saturday to announce the start of production at the site, which has faced opposition due to environmental issues. He said he expects the first vehicles from the Berlin facility as early as next month.
Ives, who has an outperform rating and a price target of $1,000 on the shares, said that Austin is set to become an epicenter of Tesla's capacity buildout over the coming years.
As more production moves to Austin from Fremont over time, Ives said he can see incremental auto margin expansion for Tesla given the scale and scope of the Austin blueprint into 2022 with Cybertruck front and center.
Musk said on Twitter that Tesla's Full Self-Driving Beta 10.2 software update is "now rolling out to cars with 100/100 safety score over 100 miles" after delays due to "a few last minute concerns."
The FSD system is sold as a package for $10,000 or $199 a month in the U.S.