Wells Fargo Visits Tesla's GigaTexas Factory

Investing.com — Wells Fargo (NYSE:WFC) hosted a visit at Tesla (NASDAQ:TSLA)'s GigaTexas factory on Thursday, which was ultimately canceled due to an unexpected utility issue at the facility.

Despite the change in plans, the firm had the opportunity to test drive the Cybertruck and discuss the company's recent developments with Tesla's Investor Relations (IR) representative, Abhinav Davuluri.

During the visit, discussions with Tesla's IR highlighted the company's strong third-quarter cost performance, noting a $1,700 quarter-over-quarter improvement in cost of goods sold (COGS) per unit. This improvement was driven mostly by lower commodity costs, with leverage, freight, and improved Cybertruck margins contributing as remaining factors, according to Wells Fargo analysts led by Colin M. Langan.

While the majority of the commodity cost benefits were realized in the third quarter, some residual advantages may carry into the fourth quarter. However, analysts caution that pricing could be challenged quarter-over-quarter due to a promotional 0% financing offer in the U.S., compared to 1.99% in the third quarter, along with product mix issues related to the Cybertruck.

Tesla's progress on its Robotaxi initiative was also discussed. The IR indicated that the main hurdle remaining is the validation process, noting that most compute issues have been resolved and the team is now focused on Hardware 4. Moreover, efforts are underway to mitigate problems such as sun glare, with additional cameras being considered as a solution. Tesla plans to deploy Robotaxis with safety drivers in California and Texas next year and has been conducting employee tests in San Francisco.

The company remains optimistic that Full Self-Driving (FSD) data from China could be transferred to the U.S. for testing by the first quarter of next year.

Regarding the impact of the recent election and Elon Musk's involvement in various ventures, the IR clarified that Musk's primary focus remains on Tesla, while his other businesses have their own chief operators.

Tesla is prepared with contingency plans for all regulatory scenarios and remains hopeful that the Inflation Reduction Act's (IRA) Plug-in Electric Vehicle (PEV) tax credits will stay in place. The firm believes that if the $7,500 IRA EV buyer credits were removed, their competitors would face more adverse impacts.

Wells Fargo also received an update on Tesla's upcoming affordable model, expected to launch in the first half of 2025. Priced under $30,000 with IRA subsidies, this new model will share platforms with the Model 3 and Model Y but will feature distinct styling to minimize the risk of cannibalization. The model is set to launch at multiple Tesla plants.