Wells Fargo visited Tesla’s GigaTexas factory. Here are the key takeaways

Investing.com — Wells Fargo (NYSE:) hosted a visit at Tesla (NASDAQ:)’s GigaTexas factory on Thursday, but the tour was 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 & improved Cybertruck margins the remaining factors,” Wells Fargo analysts led by Colin M. Langan note.

While the majority of the commodity cost benefits were realized in the third quarter, there may be some residual advantages going into the fourth quarter. Still, analysts point out 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, and product mix issues related to the Cybertruck.

Tesla’s progress on its Robotaxi initiative was also discussed, with the IR indicating that the main hurdle remaining is the validation process.

“Most compute issues have been resolved & the team is now focused on Hardware 4,” analysts reveal.

Moreover, efforts are underway to mitigate issues 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 is hopeful 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, with other businesses having their own chief operators.

Tesla is prepared with contingency plans for all regulatory scenarios and remains optimistic that the Inflation Reduction Act’s (IRA) Plug-in Electric Vehicle (PEV) tax credits will remain in place. Should the $7,500 IRA EV buyer credits be removed, Tesla believes its competitors would be more adversely affected, the note states.

Wells Fargo also received an update on Tesla’s upcoming affordable model, slated for release in the first half of 2025.

Priced under $30,000 with IRA subsidies, the new model will share platforms with the Model 3 and Y but will feature distinct styling to minimize the risk of cannibalization. The model is expected to launch at multiple Tesla plants.