Tesla’s (TSLA) shares rose by over 1% early Wednesday following plans by the electric vehicle giant to pump almost $250 million in additional capital into its battery cell production plant outside Berlin. It comes as competition remains intense, with BYD (BYDDY) continuing to double down on its European penetration.
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Tesla and BYD Target European Expansion
The Chinese carmaker is now said to be in talks with Stellantis (STLA) and other European carmakers to take over idle factories in the region. The new capital from Tesla builds on the nearly $1.2 billion investment made last December.
The extra investment will see capacity at the site — its only gigafactory on the continent, which is located in Grünheide, a town southeast of the German capital — jump from 8 gigawatt hours (GWh) planned in December to possibly 18 GWh. The move comes as Tesla is aiming to organize both its battery cell and electric vehicle production at a single location starting next year.
Barclays Sees ‘Improved European Demand’
The plans by the EV maker come as data indicates that the company is making a sales comeback across several markets in Europe, including Germany, France, and Spain. In March, its vehicle registrations in Germany grew by 315% year-over-year.
Barclays analyst Dan Levy sees the new capacity boost as a “potential read on improved European demand.” Levy believes that the expansion could help Tesla deliver battery supply for more than 250,000 units of its Model Y SUV.
However, the analyst maintained his Hold rating on Tesla stock and set a price target of $360, implying roughly 17% downside risk in the months ahead.
Is Tesla a Good Stock to Buy?
Across Wall Street, Tesla’s shares remain a Hold based on analysts’ consensus rating. This breaks down to 12 Buys, 12 Holds, and five Sells issued by 29 analysts over the past three months.
Moreover, the average TSLA price target of $403.86 implies about 7% downside risk from current trading levels.
