We just found out some major news regarding Tesla (NASDAQ:TSLA). If it wants to compete, it needs a massive investment.
Tesla would need to to spend up to an additional $8B in its network of charging stations in the U.S. alone if it wants to make recharging a car as convenient as going to a gas station, UBS analyst Colin Langan says in a new report. UBS estimates the average drive time to the nearest TSLA Supercharger is 31 minutes vs. the average drive time to the nearest gas station of only four minutes; extrapolate that, and TSLA would need to add ~30K new chargers to compete with the network of gas stations across the U.S., Langan says. Combining as much as $8B for the Supercharger network with additional planned costs for Gigafactories, Model 3 investments and other costs, TSLA could need $35B in capex through 2025, prompting Langan to reiterate his Sell rating and $160 price target on the stock.
“Cash burn is one of our key near-term concerns for Tesla,” Langan says. “While there is significant focus on the cash burn associated with the Gigafactory and Model 3 launch, there is little focus on the cost of building out the electric vehicle infrastructure and servicing network.”
As Tesla remains a hot stock, we think this is bearish news.