Tesla may receive 1 billion euros in subsidies from Germany

Tesla’s plant in Germany, in the vicinity of Berlin, may receive significant financial assistance from the government and local authorities. Tesla shares are up 5.8% after receiving a new maximum price target from Piper Sandler.

Tesla (TSLA) shares received two good news on Monday:

  • government funding of at least € 1 billion ($ 1.2 billion) for the construction of a Tesla battery plant in Germany, Business Insider reported, citing anonymous government sources.

  • Piper Sandler doubled its target price for Tesla shares to a new analyst high of $ 1,200.

Tesla shares, which are up 545.4% in the past 12 months, rose 5.83% on Monday at the close of trading.

Monday was a generally favorable day for market growth, with the S&P 500 closing 1.61%, the Nasdaq Composite 2.55%, and the Dow Jones adding 0.76%.

Other EV makers also rose on Monday, including Nikola (NKLA) + 1.82%, Workhorse (WKHS) + 13.23%, XPeng (XPEV) + 2.26% and Lordstown Motors (RIDE) + 1.27%.

In its Q4 financial report, Tesla released a photo showing the results of the rapid pace of plant construction in Brandenburg, Germany and Austin, Texas, USA.

While there was no official confirmation of the € 1 billion subsidy either from government agencies or from Tesla itself, this additional funding would allow it to complete construction and move on to production sooner.

The European Union last week approved the € 2.9 billion European Battery Innovation project, which includes over 40 companies, including Tesla, BMW and others. The goal of the project is government support for the production of batteries for electric vehicles and reduction of imports from China, the industry leader.

A share of about 10% of the total public funding should also be allocated from the budget of the city of Brandenburg.

Tesla plans to make its German plant “the most modern electric vehicle plant in the world,” production plans include Model 3 and Model Y with new battery technology and hiring about 10,000 employees. Tesla’s Gigafactory Berlin-Brandenburg plant is expected to begin operations in the second half of 2021.

Piper Sandler analyst Alexander Potter doubled Tesla’s stock price target on Monday from $ 515 to a new analyst high of $ 1,200, with an “outperform” rating.

Potter estimates Tesla will deliver 894,000 vehicles this year, up 79% from the 499,550 units in 2020.

The forecast is above Tesla’s own “vague” forecasts last week, when the company said it “expects to achieve 50% CAGR in vehicle shipments over the coming years,” which translates into more than 750,000 units of shipments.

At the same time, the average target price for Tesla shares among analysts is below current levels, which indicates a downside risk. The strong rally in the industry leader in 2020 is also forcing some investors to look for alternatives to Tesla stock. For more information on other companies that can benefit from the growth of the electric vehicle market, see Marketinfo.pro article “15 Companies That May Benefit from the Growth of the Electric Vehicle Market in 2021.”

Growing interest from investors is also demonstrated by shares of Chinese electric vehicle manufacturers Nio (NIO), Li Auto (LI) and Xpeng (XPEV). On Monday, Nio and XPeng reported a 352% and 470% rise in electric vehicle shipments in January, respectively.

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