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Tesla (TSLA) is seen solving its ‘high-class problem of demand outstripping supply’ in 2022

Tesla’s stock (TSLA) is up in premarket trading today on a new note from top Wall Street analyst Dan Ives who believes Tesla is going to double its production capacity in 2022.

With delivery times of up to a year for some of its models, Tesla is currently sitting on what Ives called a “high-class problem of demand outstripping supply.”

The question is how fast can the automaker ramp up production to address that demand.

Tesla is currently making electric cars at a rate of roughly 1 million per year.

Ives believes that Tesla is going to double that next year and exit 2022 with a production rate of 2 million cars.

The analyst wrote in a new note to clients today:

We believe by the end of 2022 Tesla will have the capacity for overall ~2 million units annually from roughly 1 million today…

Most of that growth is going to come from two new factories coming online any day: Gigafactory Berlin and Gigafactory Texas.

Tesla’s growth in 2022 is going to be dependent on how smooth the production ramps are going to be at those two factories.

Those production ramps are also going to free up production capacity at Gigafactory Shanghai and enable Tesla to grow deliveries in China.

Ives noted the importance of the Chinese market for Tesla in 2022:

While logistical hurdles will be a near-term cost burden, we importantly believe Tesla has the potential to further expand its auto [gross margin] and profitability profile over the next 12 to 18 months especially with more higher-margin cars being sold and produced in China…

The firm reiterated a $1,400 price target on Tesla’s stock with a bull case of $1,800 per share.

Tesla’s stock was up 1% on the new note with the stock trading $1,105 per share in premarket.

Wedbush analyst Dan Ives is ranked #22 out of 7,756 analysts on TipRanks with an average success rate of 76% and an average return of 36%.

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