Tesla, Inc. (Tesla), a leading American electric vehicles (EVs) manufacturer, has soared its stock as its partner, Panasonic, which is making batteries for Tesla’s EVs, revived to earn profits in its battery business recently.
Elon Musk’s Tesla surged 20% on Monday, January 3, 2020, which was its largest one-day gain since 2013 following the Panasonic’s battery business achieved a quarterly profit after its shrinking revenue for years. According to an investor report, the car maker’s shares are expected to rise more than ten-fold by 2024.
Surging of Tesla and Panasonic Operations
Panasonic Corp. (Panasonic), a Japan-based electronics company headquartered in Osaka, Japan had entered a partnership with Tesla in 2014 for a venture to build batteries for EVs as a part of its strategic transformation of operations from low-margin electronics to automobile components. After a prolonged struggle of shrinking its revenues on battery business, the Japanese company reported having a quarterly profit on Monday for the first time since its joint venture started.
Referring to the slowdown of the battery business, Musk said in April 2019 that battery production had already put a constraint on the output of Tesla’s Model 3 sedans. Panasonic’s CEO, Hirokazu Umeda told an earnings briefing, “We are catching up as Tesla is quickly expanding production” referring to its battery cell production.
Tesla’s CEO, Musk had earlier announced that the company made its second consecutive quarterly profit last Wednesday. Till Monday, the company was able to gather over 30% shares gain which was considered a remarkable performance compared to its rivals including General Motors Co. and BMW.
According to Reuters, Tesla stock gained over 300% since early June 2019 as its sales of electric cars increased significantly and mass production of new eco-friendly cars at ‘Gigafactory’ in Shanghai. Citing the rise of production, Umeda asserted, “Higher production volume is helping to push down materials costs and erase losses.”
Expected for Enormous Expansion in Coming Years
Citing the impressive growth of Tesla, investment management firm Ark Invest made a statement on January 31, 2020, suggesting that the company’s stock would be surged up to $7,000 by 2024, compared to Monday’s record high of $780. As per Reuters’ calculation, with this estimation, the company would be crossing its market capitalization $1.3 trillion by that year.
Musk had already announced to launch new ambitious operations of its “robotaxi” autonomous cars last year. Musk told investors in April 2019 that automatic cars, robotaxis would be started operating in the US market by 2020 despite several analysts criticized the company’s plan as unrealistic.
According to a financial analytics firm, S3 Partners claimed that those investors betting against Tesla suffered a huge loss in their stock business, saying, “Short sellers on Monday suffered paper losses of over $2.5 billion, bringing their losses in 2020 to more than $8 billion.”
Panasonic officials said that the company’s profit for the October-December quarter rose 3% to 100.4 billion yen ($915 million) surpassing the analysts’ estimates by 49% due to the increasing sales of Tesla battery business as well as the cutting of cost expenses.
Replying to question about expanding its operations with other companies, Umeda insisted, “We will focus on demand at Gigafactory for Model 3 and Model Y.” According to Reuters’ report, 20 analysts have forecasted Tesla’s profit for the current fiscal year through March 2020 would be around 300 billion yen above the analysts’ estimate of an average profit of 295.14 billion yen.
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