Tesla has shown it presents a significant risk to legacy automakers as the electric vehicle market grows stronger, as Oppenheimer's analyst Colin Rusch told CNBC on Monday.
Rusch became the biggest Tesla bull on Wall Street earlier in the day when he raised his price target on the stock by nearly 60% to $612 (approximately £471) per share.
“Tesla has really proven to be an existential threat for those companies,” Rusch said while explaining his price hike on “Power Lunch” – a CNBC show that delves into the economy, markets, politics, real estate, media, technology and more.
Rusch specifically referenced the message sent by Tesla with its new Gigafactory 3 in Shanghai – which was built in only 10 months – that began delivering EV cars at the end of 2019 and has reportedly increased production to more than 1,000 vehicles per week.
“First ground to the first car was less than a year. I think that put a lot of automakers on notice,” Rusch added.
Shares of Tesla soared past $500 (approximately £385) for the first time ever today en route to a new all-time intraday high of
$537.07 (£413). The stock is up more than 8% from where it closed Friday, and it’s risen more than 100% since late September.
Although electric vehicles still represent a small share of global sales, companies such as Ford and General Motors have ambitious investment plans as they seek to rival Tesla.
By 2022 Ford intends to spend $11 billion (£8.47 billion) in developing more than 36 new all-electric and hybrid models.
GM recently announced its intentions to bring back the Hummer with an all-electric pickup version as it accelerates its push to have at least 20 new electric vehicles globally by 2023.
Tesla is the best-known maker of electric vehicles and its market capitalization is above $90 billion (£69 billion) — which is more than $3 billion (£2.3 billion) larger than Ford and GM combined.
Tesla’s Model 3 was the bestselling electric vehicle in the world in the first 11 months of 2019, and its entrance in China is notable because the country is the largest market for autos globally.
Many automakers – including Volkswagen – view China as a sort of launchpad for their electric vehicles, as reported by CNBC back in April 2019.
In researching the electric vehicle market ahead of its price hike – Rusch said – significant attention was paid toward the designs of cars released by competitors.
“And what we were looking at is designs very similar to the Tesla Model 3 coming out two or three years from now”. “So our conclusion is that – given some time – Tesla having a little more risk tolerance as an organization and being able to learn from its mistakes, is going to continue to evolve ahead of their competition” – Rusch added.
He also mentioned that Tesla’s significant number of electric vehicles on the road — more than 600,000 currently — can give a massive data advantage over rivals as autonomous vehicle development matures.