Tesla (NASDAQ:TSLA) stock has spent September trekking gradually upward. Since its successful stock split, general market volatility has made it difficult for the electric vehicle (EV) leader to gain significant momentum. However, Tesla recently received a boost following an investment from Brad Gerstner of Altimeter Capital. Yesterday, the company also announced a new plan for growth, one that has the potential to significantly boost sales in Europe’s growing EV market.
Specifically, a Tesla insider recently indicated that the company plans on doubling unit sales from Gigafactory Berlin. This would require the company to produce a total of 80,000 for the year.
Despite some volatility, TSLA stock did climb when the news broke. Let’s take a closer look at what investors can expect from Tesla.
What This Means for TSLA Stock
Tesla’s push to expand and conquer international markets has been a defining trend in recent years. It has also been a reliable driver for TSLA stock, as the company has done an overall impressive job keeping pace with booming global demand for EVs. Tesla opened its Berlin factory back in March, showing the world that CEO Elon Musk has no plans to slow down. The facility even has a Giga Press, a massive casting machine that streamlines production and lowers costs.
Now, Tesla looks ready to show the world what Gigafactory Berlin can do. According to German auto news outlet Automobilwoche, a Tesla site manager expressed the facility’s goal to “double sales every year, so we would be at about 80,000 units in 2022.”
If the facility can reach that goal, it would be a significant catalyst for TSLA stock. But that doesn’t mean it will be easy. As Electrek reports, Tesla finished August “just short of 25,000 deliveries.” However, “Gigafactory Berlin is expected to help as it ramps up production and increases Model Y availability in the country.”
Tesla has proven that it can surprise skeptics and increase production despite a complicated economic landscape. But can it reach such a high number in such a short amount of time? To meet the goal, it would have to produce and sell 55,000 EVs in only a few months. Selling that many cars likely wouldn’t be too difficult, but producing them in such a tight time frame is a different story.
The Road Ahead
In June, Tesla reported it had reached the milestone of 1,000 vehicles per week at the Berlin factory. But with only 15 weeks left in the year, that rate would only get Tesla 15,000 vehicles before the end of 2022. Tesla will have to ramp up production significantly if it wants to reach 80,000 EVs by the new year. Per Barron’s:
“Tesla has sold almost 25,000 vehicles in Germany through August. That’s an increase of about 37% year over year, but only good enough to give Tesla a market share of about 1.5%.”
While the odds may not look great, the payoff for Tesla would be significant. If the company were to double its production and sales in Germany, it would face off with some much more established competitors. In an auto market where names like BMW (OTCMKTS:BMWYY) and Mercedes-Benz (OTCMKTS:DMLRY) are highly celebrated, cutting into their market share could help restore investor confidence in TSLA stock.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
