Giga Shanghai Will Act as a Q2 Headwind for Tesla but 2H22 Will See ‘Strong Production Rebound’ – Mizuho

Mizuho analyst Vijay Rakesh reiterated a Buy rating and a $1,300.00 per share price target on Tesla (NASDAQ:TSLA) after hosting a field trip in Fremont.

The analyst sees near-term headwinds for Tesla as Giga Shanghai, which is ~40-50% of Tesla’s capacity, continues to operate in a limited mode. However, this could set the stage for a “strong production rebound” in the second half of the year, says Rakesh.

“We believe TSLA has potentially ~1.4M of its 1.5M C22E target units that could be produced at just Fremont and primarily Shanghai as the major hub. But with Shanghai residents/logistics still mostly in lockdown, we believe Giga-Shanghai reopening will likely be slower than expected, with headwinds in intra- and inter-city logistics a nearterm JunQ drag. We believe monthly April deliveries were ~40k, down ~22% from Jan’s ~51k, therefore the JunQ top line could be down q/q. That said, we believe a potentially stronger SepQ/DecQ rebound is possible with improved supply chains and Berlin ramping,” Rakesh wrote in a client note.

The analyst also shared some insights from the talks with Martin Viecha, VP of IR Tesla.

Cobalt-free iron-phosphate (LFP) batteries are now ~50% used in TSLA models with the new 50% low-cost 4680 “could drive BETTER profitability.” Moreover, Rakesh also believes that Giga Berlin is “starting new Model Y shipments at modest levels.”

On FSD, the analyst sees the installed base of around 3 billion miles imaging database and roughly 2.7 million Tesla EV units as tailwinds to AI training.