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Take a pass on Tesla, says Roth Capital

Tesla

Roth Capital Partners analyst Craig Irwin is sticking with a “Neutral” rating on EV automaker Tesla (Tesla Stock Quote, Charts, News, Analysts, Financials NASDAQ:TSLA), saying in a Tuesday company note that Tesla’s new deal with Ford Motor Company should give it access to funds under the US’ Infrastructure Bill. 

Last week, Tesla and Ford announced a partnership on electric vehicle charging stations whereby Ford EV owners will have access to over 12,000 Tesla Supercharger stations across the US and Canada, commencing next year.

“We’ve spent the last ten years building an industry-leading Charging Network that enables freedom to travel and provides charging confidence for our Tesla owners,” said Rebecca Tinucci, Tesla senior director of charging infrastructure. “We’re excited to deliver on our mission to accelerate the world’s transition to sustainable energy by welcoming Ford owners, and other electric vehicles who adopt NACS, to our thousands of Superchargers across North America.”

Irwin said while at this point there is no account of the price Ford vehicle owners will pay to use Tesla’s chargers, the move is a positive for the whole EV charging sector, where Tesla currently has almost three times the charging stations of the rest of the industry combined.

“We expect additional auto OEM support for charge network build outs, and most likely on independent networks,” Irwin wrote.

The analyst noted that in February, the US government said Tesla has agreed to make at least 7,500 of its chargers available for third-party use by the end of 2024, which should help facilitate Tesla’s access to some of the $7.5 billion in Federal Infrastructure Bill funding for EV charging networks.

On Tesla’s stock, Irwin maintained an $85 per share target price, which at the time of publication represented a one-year projected return of negative 56 per cent.

“Our Neutral rating deviates from the ROTH standard rating system, and we believe the Neutral rating appropriately balances how Tesla is positioned to continue executing, but the shares are valued at an oversize premium to all peers in the automotive sector, in our view,” Irwin said.

“The current market valuation appears to rest on the specious assumption that the hundreds of EVs slated for launch by ’25 will all be flops. Tesla does not operate in a vacuum,” he said.

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