Tesla Updates Solar Pricing/Power, JPMorgan Ups Price Target

Rob Maurer

Tesla Adjusts Solar Pricing/Power

Tesla has lowered the price of their rooftop solar panel systems by 20-25% while also increasing the efficiency of their solar panel offering by about 10%. Tesla offers four different size systems with cost per Watt ranging from $2.45 - $1.84, before the 26% federal tax credit. According to data by Energysage.com, the average cost per Watt for installation in the US in January 2020 ranged from $2.27 - $3.14 before incentives making Tesla’s new pricing extremely competitive.

JPMorgan Chase Increases Price Target

Ryan Brinkman of JPMorgan Chase today increased his price target on TSLA from $240 to $275, implying ~70% downside to TSLA’s shares.

“We see Tesla as by far the most overvalued stock in our coverage group (apart from Hertz, which we also rate Underweight and for which we previously withdrew our price target prior to its bankruptcy)” - Ryan Brinkman, JPMorgan Chase

SeekingAlpha, in an article reporting on the updated note shares more detail.

“Brinkman acknowledges that both technology and execution risk seem substantially less than was once feared for Tesla, but says expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition. Valuation appears to be pricing in upside related to expansion into mass-market segments well beyond our volume forecasts for the Model 3, he notes.” - SeekingAlpha

Competition has been cited as a concern on TSLA’s valuation for years, but has yet to significantly impact Tesla’s ability to capture market share. With the trouble other automakers have had competing in the premium segments, it seems unlikely they would be competitive with more mass-market electric vehicles in the near future.

Looking at Brinkman’s price target, if we assume Tesla’s 2020 revenue exceeds $30B, a $275 price target would represent a price-to-sales (P/S) ratio of ~1.5.

Most automakers are valued at 0.1-0.4 P/S due to poor growth and profitability outlooks, while Tesla’s current P/S is around 6. For context, Amazon, another fast growing company, trades around a 4.5 P/S currently.

Tesla Updates Early Access Autopilot Features

Early access program (EAP) members for Tesla’s Full Self-Driving suite have reportedly received emails from Tesla letting them know about the recent version of software being pushed over the air to their vehicles.

“We will be pushing software version (2020.24.5.1) to your vehicle shortly. This software update contains an improvement to our new Traffic Light and Stop Sign Control feature. Your vehicle will no longer require driver confirmation to continue through green lights while there is a lead vehicle ahead of you and not in a turn lane. Every driver is responsible for remaining alert and active when using Autopilot and must be prepared to take action at any time.” - Tesla in a reported email to EAP members

This seems to have been first shared by Twitter user LiveAndDieOnMars and was later confirmed by Musk in a tweet. Currently, the vehicles come to a stop regardless of the color of the stop light unless the driver confirms it’s green. For those receiving this update, this confirmation would no longer be required when there is a lead vehicle, with the on-screen driving visualization for that stop light turning green to indicate the car will continue through the intersection.

BMW & Daimler Partnership

BMW is reportedly cutting 6,000 jobs in Germany and reevaluating its partnership with Daimler. In a joint statement, the automakers said they are “putting their cooperation temporarily on hold”.

“Following extensive review, the two companies have arrived at a mutual and amicable agreement to concentrate on existing development paths - which may also include working with current or new partners” - BMW and Daimler

BMW’s head of development, Klaus Fröhlich, believes BMW already has access to the technology needed over the next few years 

“Our current technology generation offers very strong, sustainable potential: With extremely powerful sensors and computing power, our robust modular system puts us in an excellent position to offer our customers what they need for many years.” - Klaus Fröhlich.