Tesla stock is big buy, Goldman Sachs says

Brian Sozzi
·Executive Editor
Updated ·3-min read

Tesla's stock has been on an electrifying run this summer, and it may not yet be over.

Shares of the EV maker are up 12% in the last three months, handily outperforming the S&P 500's nearly 5% decrease over that time.

Wall Street credits the push higher in Tesla shares to optimism around new government legislation that will support the adoption of EVs in 2023 and beyond. Tesla's strong execution in the first two quarters of the year has also won over the bears.

Despite the stock's rise, Goldman Sachs analyst Mark Delaney believes there is more upside to Tesla. Delaney's hot take comes after a meeting with Tesla's head of investor relations Martin Viecha.

Here's what Delaney had to say on Tesla following that pow-wow.

  • Price Target: $333.33

  • Rating: Buy (reiterated)

  • Stock price movement assumed: +22%

Takeaway #1: Tesla's costs are headed lower

"Tesla’s automotive cost of goods sold per vehicle fell to about $36,000 in 2021 from over $70,000 in 2017. While this metric increased in the second quarter driven by factory shutdowns, factory start-up costs, and input cost pressure, cost of goods sold per car can trend lower over time as Tesla benefits from the ramp of the Berlin and Austin factories (and the reduced percentage of vehicles coming from Fremont, which is a converted ICE factory with higher costs than Tesla’s purpose-built EV factories), scale, and vehicle platform and battery improvements."

Takeaway #2: Tesla is a winner from the Inflation Reduction Act (IRA)

"It’s too soon to say what impact the Inflation Reduction Act will have for Tesla, and a lot will depend on guidance from the government about how the law will be interpreted. However, we note that the IRA does seek to encourage a North America based EV supply chain and Tesla has more local manufacturing than average (with Model 3 and Y recognized as the most American-made vehicles per media sources), and we believe this will be a positive for Tesla to potentially qualify for at least partial credits on some vehicles over time (and Tesla could potentially benefit as well in our view from incentives for solar, batteries, charging, and commercial vehicles)."

Tesla Model 3 vehicle is on display at Tesla booth ahead of the 2022 China International Fair for Trade in Services (CIFTIS) at China National Convention Center on August 29, 2022 in Beijing, China. (Photo by VCG/VCG via Getty Images)
Tesla Model 3 vehicle is on display at Tesla booth ahead of the 2022 China International Fair for Trade in Services (CIFTIS) at China National Convention Center on August 29, 2022 in Beijing, China. (Photo by VCG/VCG via Getty Images)

Takeaway #3: Tight EV supply supports higher prices, profits

"Tesla believes that consumers will increasingly move toward EVs, similar to other technology inflections (e.g. CRT to LCD TVs, and feature phones to smartphones), but the EV industry could be supply constrained over the intermediate term as new battery/component supply and assembly takes time to ramp up."

Goldman's investment thesis on Tesla

"We believe that Tesla, given its leadership position in EVs (including its vertical integration and tight coupling of hardware and software, as well as its ecosystem of charging stations and brand), and its focus on clean transportation more broadly (given its solar and storage businesses) is well positioned to capitalize on the long-term shift to EVs. We expect Tesla to expand margins in the intermediate term as it ramps the important Model Y product as well as new factories in Berlin, Germany and Austin, Texas, and in the long-term as it increases its mix of software revenue."

From the Yahoo Finance Live archive: GM CEO Mary Barra on taking on Tesla

Barra laid out her vision for GM — which will pit it against Tesla in EVs — in a recent interview with Yahoo Finance editor-in-chief Andy Serwer.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube

  • Up next
  • Up next
  • Up next
  • Up next

Latest stories

  • Horrifying moment husband wheels suitcase containing murdered wife from home while carrying child

    A husband who strangled his wife in front of her two children and lover on a video call was captured wheeling the suitcase containing her body out of his home.

  • Conservatives Routed in Worst Election Result for 200 Years

    LONDON—The Conservatives, the world’s winningest political party, were booted out of power in dramatic style on Thursday after 14 years of chaotic and divisive rule.The Labour Party had secured a landslide victory, ending an era of Conservative rule over Britain that stretches back to 2010; the year that the iPad and Instagram were launched and Lady Gaga wore that meat dress to the MTV music awards.In that time, the Conservatives have cycled through five leaders, each of them dragging the party

  • When Ms ‘Malaysia’ visits Malaysia: American tourist gets warm welcome from locals awed by unique name (VIDEO)

    KUALA LUMPUR, July 5 — An American tourist decided to visit Malaysia for a special reason: Malaysia also happens to be h...

  • Embattled Biden makes latest gaffe saying he’s the ‘first Black woman to serve with a Black president’

    President’s July 4 blunder comes as he desperately tries to claw back confidence among voters and party members after last week’s debate flop

  • Joyce Chen confirms she has become a mother

    The TVB actress shares photos of her and her daughter, not revealing partner's identity

  • ‘I’ve lost my job and my house, but my wife and I are worth £650m – how can we pay less tax?’

    Rishi Sunak, 44, finds himself in a bind. After a highly successful career in the City of London, followed by a brief but eventful spell in politics, he has suffered a serious demotion and been evicted from his home.

  • 74-year-old woman dies after being shoved in front of San Francisco train

    Corazon Dandan died after being pushed into an oncoming BART train at San Francisco’s Powell Street Station at around 11 p.m on Monday night. The suspect, 49-year-old Trevor Belmont, also known as Hoak Taing, was arrested at the scene and booked into the San Francisco County Jail on suspicion of homicide and elder abuse. Dandan, who was Filipino American, was a dedicated telephone operator at the Westin St. Francis and other hotels.

  • Voices: Tory downfall: The 9 reasons it has all gone wrong for Rishi Sunak

    A series of world events, poor decisions and fatal gaffes conspired to see Rishi Sunak lead the Tories to the worst electoral defeat in his party’s 346-year history

  • Opinion: What Britain’s first Asian prime minister meant to my family

    The defeat of the Conservative Party in the UK election ends Rishi Sunak’s two-year premiership. Does it also sour the story of Britain’s first Asian prime minister, asks Sunder Katwala.

  • Beijing is laughing at the West’s weakness

    Russian aggression in Ukraine poses a threat to world peace and stability. China provides material support for Russia’s actions. All this is entirely clear. In Beijing, immediately after a meeting with Xi Jinping in April this year, US Secretary of State Antony Blinken said that “Russia would struggle to sustain its assault on Ukraine without China’s support”. This included selling huge quantities of machine tools and micro-electronics that would be used in the Russian defence industry.

  • The Head of NASA Is Being Awfully Catty About China's Amazing New Moon Samples

    China recently became the first country to ever return samples taken from the far side of the Moon, a historic mission that could have profound implications on our understanding of its evolution and ability to host human life. But thanks to a law called the Wolf Amendment, which was enacted by the US government in […]

  • How Obama mentored the new UK prime minister to help him tell his story

    The leader of the Labour Party, Keir Starmer, has been mentored by Barack Obama. The relationship is likely to continue if Starmer wins the UK election.

  • PKR-linked think-tank says Sungai Bakap race too close to call

    KUALA LUMPUR, July 5 — Pakatan Harapan’s Joohari Ariffin could win the Sungai Bakap by-election in Penang tomorrow if hi...

  • Immigration nabs 75 in Klang Valley prostitution crackdown

    KUALA LUMPUR, July 6 — The Immigration Department conducted a crackdown on a foreign prostitution syndicate in the Klang...

  • Canadian Police Seek Suspects in Pants-on-Fire Arson

    One of two suspects in an arson in Richmond, British Columbia, set himself on fire and “despite efforts of both the suspects, [his] pants continued to burn,” according to Royal Canadian Mounted Police (RCMP).The RCMP released footage of the incident, which they said occurred in the early hours of April 24.“At approximately 4:30 am Richmond RCMP attended for an alarm at a business located in the 2600 block of Simpson Road,” police said.“Frontline officers located a broken window and small fire directly in front of it. Evidence was also located which indicated the fire had been intentionally set.“A subsequent review of video surveillance from the area determined that two unidentified men wearing masks had approached the business on foot prior to allegedly smashing the window and then lighting an object on fire. While lighting it, one of the suspect

  • Seven moments over 14 years that destroyed the Conservative government

    The Tories have lost the 2024 general election with the worst results in the party's history. Here are the key moments that brought them down.

  • Portugal v France: a galactic battle lost in the black hole of one man’s ego

    This Euro 2024 clash could have been an all-time great quarter-final, and instead a part of it was stolen

  • Zelensky U-turns as he invites Russia to attend peace summit without giving up land

    Volodymyr Zelensky has invited Russia to the next peace summit despite previously saying it could only join if it relinquished land in Ukraine.

  • Lebanon's Hezbollah rains 200 rockets on Israel as Gaza war rages

    Lebanon's Hezbollah launched more than 200 rockets and drones at Israeli army positions on Thursday, escalating tensions between the two adversaries amid the Israel-Hamas war in Gaza.After months of deadlocked Gaza ceasefire efforts, Israeli Prime Minister Benjamin Netanyahu said he agreed to send a delegation for talks aimed at securing the release of hostages seized in Hamas's October 7 attack that sparked the war.The announcement, which came a day after Hamas said it had "ideas" on halting the nearly nine-month conflict, followed a phone call between Netanyahu and US President Joe Biden."The leaders discussed the recent response received from Hamas" and "the President welcomed the Prime Minister's decision to authorise his negotiators to engage with US, Qatari and Egyptian mediators in an effort to close out the deal," the White House said.Israel launched a military offensive against Hamas in the Gaza Strip on October 7, in response to an unprecedented attack by the Palestinian Islamist militant group on its territory.The next day Hezbollah, in support of its ally Hamas, opened a front on Israel's northern border with Lebanon, and the two sides have since exchanged near-daily cross-border fire.Hezbollah said it fired more than 200 rockets and "explosive drones" at army positions in northern Israel and the Israeli-annexed Golan Heights in retaliation for an Israeli strike that killed one of the Iran-backed group's commanders.Air raid sirens blared across northern Israel in the morning, and an AFP correspondent witnessed rockets crossing the frontier that were mostly intercepted by Israeli air defences but sparked wildfires.A military source said later a soldier was killed by a rocket fired into northern Israel.- Fighting in Gaza City -The Gaza war broke out after Hamas's October 7 attack on southern Israel resulted in the deaths of 1,195 people, mostly civilians, according to an AFP tally based on Israeli figures.The militants also seized 251 hostages, 116 of whom remain in Gaza including 42 the army says are dead.In response, Netanyahu vowed to "crush" Hamas and Israel's military launched an offensive that has killed at least 38,011 people in Gaza, also mostly civilians, according to figures from the Hamas-run territory's health ministry.Gaza's civil defence agency said seven people were killed Thursday in Israeli strikes, including five in a school in Gaza City, in the north of the besieged territory.Fighting raged in the city's Shujaiya neighbourhood and in Rafah, on the southern border with Egypt, where an Israeli evacuation order raised fears of a major new offensive.Since the order was issued on Monday, tens of thousands of Palestinians have fled eastern areas of Rafah and nearby Khan Yunis.The United Nations says 1.9 million people are thought to be displaced in Gaza, and that around nine in every 10 people in the territory have been uprooted at least once since the war broke out."Behind these numbers, there are people... that have fears and grievances. And they had probably dreams and hopes; the less and less, I fear today, unfortunately," said Andrea De Domenico, head of the UN humanitarian office in the Palestinian territories."People who in the last nine months have been moved around like pawns in a board game."- Evacuation order -The United Nations says up to 250,000 people were affected by Israel's order to evacuate 117 square kilometres (45 square miles) -- equivalent to one-third of Gaza's territory.The Israel-Hezbollah border clashes have killed at least 496 people in Lebanon, most of them fighters but also including 95 civilians, according to an AFP tally.Israeli authorities say at least 16 soldiers and 11 civilians have been killed on their side of the UN-patrolled border.The Gaza war at the heart of the violence has meanwhile raged on, with gun battles, air strikes and shelling rocking Gaza City for an eight straight day.Israeli troops "destroyed tunnel routes in the area and eliminated dozens of terrorists in close-quarters combat with tank fire, and in aerial strikes," the military said.- 'Maelstrom of human misery' -Israel has faced an international outcry over the soaring civilian death toll, punishing siege and mass destruction in Gaza.The UN humanitarian coordinator for Gaza, Sigrid Kaag, this week called for an end to the "maelstrom of human misery".Netanyahu has insisted Israel will destroy Hamas and bring home the remaining hostages.Biden, under growing domestic pressure over Washington's support for Israel, in late May outlined a roadmap for a six-week truce and exchange of hostages for Palestinian prisoners.There has been little progress since, but Hamas said Wednesday it was communicating with officials in Qatar and Egypt as well as Turkey with an eye to ending the conflict.Hamas said its Qatar-based political chief Ismail Haniyeh had "made contact with the mediator brothers in Qatar and Egypt about the ideas that the movement is discussing with them with the aim of reaching an agreement".Netanyahu's office said Wednesday that "Israel is evaluating the (Hamas) remarks and will convey its reply to the mediators".The main stumbling block so far has been Hamas's demand for a permanent end to the fighting, which Netanyahu and his far-right coalition partners strongly reject.burs-dv/kir

  • Michelle and Barack Obama Celebrate Daughter Malia's Birthday with Sweet Throwback Photos: 'Still Willing to Hold Your Dad’s Hand'

    "You deserve the world and more," Michelle wrote to her daughter on Instagram