Tesla's (TSLA) Updated Master Plan Offers Few Surprises - UBS

UBS analyst Colin Langan reiterated a Sell rating and $160 price target on Tesla Motors (NASDAQ: TSLA) following the company's 'Secret Master Plan Part 2."

The plans is: tackle solar/storage, mass/commercial transport, fully autonomous tech, and car-sharing.

"With expectations around TSLA's future already high, we question if this new plan will surprise most investors," Langan said. "The integrated solar-storage was known post the SCTY deal, more models were expected, and autonomous/shared vehicles are a likely part of many OEM's plans. Tesla previously alluded to improving factory. TSLA now specified that it sees a 5-10 fold increase by version 3 in 2 years; however details remain light on how this will be different from traditional OEMs and credibility is challenged given near term production issues."

The analyst also notes a lack of new color on solar storage combo. "Given investor caution around the SCTY deal (stock traded down ~10% on the news), we are surprised by the lack of new details on the solar/storage combo," the analyst commented. "It is unclear why a JV wouldn't enable the same opportunity. We see the merger as an unneeded distraction adding complexity to TSLA, which already has too much on its plate with near term production issues, the coming Model 3 launch, and aggressive production targets (see Driving off into the Sunset). Also, in our prior note Merger Puts Battery Storage Front and Center, we highlighted our view that storage is not economic for most residential customers due to net metering."

The analyst said a heavy truck a surprise, while the autonomous/shared cars was expected. "TSLA announced that a new compact SUV and new kind of pickup are coming. These mass market models were widely expected; however, we are surprised by the announcement of an eventual heavy duty truck (TSLA Semi) and bus," he commented. "TSLA did not provide a timeline for these new vehicles, but we question if it can handle the added complexity of varying platforms when it is currently having issues with only 2 models. Moreover, a heavy truck application may be challenged by range (imagine the battery needed to make a cross-country trip). TSLA's focus on self-driving (10x safer than human) and shared cars is not surprising or unique to TSLA. For example, GM bought Cruise Automation and invested in Lyft with these future trends in mobility in mind."

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Shares of Tesla Motors closed at $228.36 yesterday.

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