Tesla CEO Elon Musk was pretty emotional at the company’s annual meeting in early June.
The meeting went rather well with Tesla (NASDAQ:TSLA) seeing its share prices pop nearly 10%, having its best day in trading in over two years. The last time shares had such big gains was back in November of 2015.
Not only did the meeting reveal that shareholders are backing their beloved chairman and CEO but that the company’s Model 3 weekly production rate is getting close to achievement.
According to Musk, the company is “extremely likely” to hit a weekly Model 3 production rate of 5,000 cars by the end of June.
Musk admitted, “This is … the most excruciating, hellish several months I’ve maybe ever had.” He also said that the same went for “a lot of other people at Tesla … But I think we’re getting there.”
It’s been months of doubt about whether Tesla (NASDAQ:TSLA) would be able to hit its production rate goal. The stock is one of the most shorted U.S. equity. According to FactSet, over 30% of its floating stock is currently being sold short.
Robin Ren, Tesla’s head of worldwide sales, also revealed that Tesla has plans to build its first factory outside of the U.S. in Shanghai, China. Musk also said that the company’s Nevada Gigafactory “will be, by far, the biggest building in the world.” It currently is about one-third of its planned size.
Analyst Romit Shah of Nomura Instinet wrote a note to clients stating, “We believe Model 3 average selling prices are coming in above forecast due to stronger-than-expected demand for all-wheel-drive and performance configurations.” He continued, “We also anticipate cost leverage as Tesla scales to higher levels of production.”
According to Shah, Tesla should benefit from higher-than-expected average selling prices for its first mass-market vehicle. He also noted that there was “stronger-than-expected demand for all-wheel-drive and performance configurations.”
“China is arguably Tesla’s most important regional market going forward. The company reported over $2 billion in sales in the China region in 2017, which we estimate equated to 15,000- 20,000 vehicles,” Shah noted. “This is despite the 25 percent import tariff levied on international original equipment manufacturers lacking domestic joint venture partners. China is preparing to lower its import tariff to 15 percent in July and remove the joint venture requirement, which should provide further tailwind.”
Shah increased his price target on Tesla (NASDAQ:TSLA) shares from $420 to $450.