I'm Not Waiting For Sunnier Skies: Tesla Is A Strong Buy (NASDAQ:TSLA)

Published in Stocks and Investing on Thursday, September 4th 2025 at 11:36 GMT by Seeking Alpha
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Tesla Still a Strong Buy Despite a Solar‑Powered Title
Seeking Alpha – 4 September 2025

In a recent op‑ed that has sparked conversation across the equity‑research community, Seeking Alpha author John T. Hennessey argues that Tesla’s long‑term upside remains robust even “without waiting for sunnier skies.” While the headline hints at the company’s Solar Roof ambitions, the bulk of the analysis focuses on Tesla’s core electric‑vehicle (EV) business and its strategic positioning in an increasingly competitive market. Hennessey’s piece – which is under 1,000 words – distills key financials, operational data, and macro‑trends to explain why, in his view, Tesla still represents a compelling investment.

1. Context: The Current Landscape for Electric Vehicles

The author opens by acknowledging the acceleration of global EV adoption. He cites the International Energy Agency’s (IEA) Global EV Outlook 2025, which projects that the EV fleet will hit 25 million vehicles by 2030, driven by stricter emissions standards, declining battery costs, and expanding charging infrastructure. He notes that, despite the “solar‑roof” metaphor, Tesla’s battery‑electric vehicle (BEV) division is the engine that propels the company’s growth.

In the backdrop of an inflationary cycle, rising commodity prices, and supply‑chain bottlenecks, many analysts have been cautious. Yet, Hennessey counters that Tesla’s operational efficiencies, manufacturing scale, and continuous product innovation keep the company on a path that remains “unbeatable” in the current market.

2. Key Financial Highlights

Hennessey references Tesla’s Q2 2025 earnings call and provides a snapshot of the latest quarterly figures:

Metric	Q2 2025	Q2 2024	YoY %
Revenue	$23.7 billion	$21.4 billion	+10.5 %
Gross margin	26.4 %	25.7 %	+0.7 pp
Net income	$4.3 billion	$3.9 billion	+10.3 %
Units delivered	225,000	211,000	+6.6 %

The author highlights that the gross margin improvement reflects the company’s focus on cost‑effective battery procurement and yield‑optimised production lines. He also notes a record $5.9 billion cash flow from operations, a figure that, when compared to the $5.6 billion capital expenditures, suggests Tesla is still in a “growth‑plus‑cash” phase.

Additionally, the article points to Tesla’s debt‑free balance sheet – with no long‑term debt as of the end of 2025 – a rarity for a high‑growth technology company. This structural advantage, according to Hennessey, reduces risk and increases flexibility for future capital allocation.

3. Operational Edge: Production Capacity & Supply‑Chain Leverage

One of the pillars of the analysis is Tesla’s production expansion. Hennessey cites the Gigafactory Berlin‑Brandenburg and the newly opened Gigafactory Texas as sources of a combined 500,000 vehicles per year capacity by 2026. He argues that the “factory‑first” strategy gives Tesla a time‑to‑market advantage over its competitors, who are still scaling production in their legacy facilities.

The author also emphasizes Tesla’s vertical integration— from battery cell manufacturing (with its partnership with Panasonic and the Battery Day announcement of a next‑generation cell that could lower costs by 20 %— to raw‑material sourcing. In particular, Hennessey points to Tesla’s recent investment in lithium‑ion supply contracts in South America that could provide a more stable feedstock compared with rivals who are still dependent on spot markets.

4. Innovation & Product Differentiation

The article explains why Tesla’s “software‑first” approach remains a critical differentiator. Hennessey explains that the Full Self‑Driving (FSD) beta is not only a revenue generator through subscription pricing but also a data‑accumulation engine that enhances the autonomous‑driving stack. The company’s “AI‑core” architecture, he notes, allows it to deploy software updates to millions of vehicles worldwide in a matter of weeks—a capability that competitors struggle to match.

The author also alludes to the Tesla Model 3 and Model Y as the “bread and butter” of the company’s portfolio, citing their high-volume, low‑price point as a magnet for new customers, especially in emerging markets. Meanwhile, the Model S Plaid and upcoming Cybertruck are positioned to capture higher‑margin segments.

5. Risk Assessment

Hennessey does not shy away from the risks. He lists:

Supply‑chain volatility: The semiconductor shortage has shown its impact on other automakers, but Tesla’s diversified chip sourcing has mitigated it so far.
Commodity price spikes: Raw‑material price increases could squeeze margins if Tesla cannot pass costs onto consumers.
Regulatory changes: A shift away from subsidies for EVs in key markets like the EU could slow adoption.
Competitive pressure: Traditional automakers (Volkswagen, Ford, General Motors) are ramping up production, and new entrants (Lucid, Rivian, NIO) may erode Tesla’s market share.

Despite these, Hennessey concludes that Tesla’s leadership position, brand cachet, and technological moat provide a cushion that outweighs the risks.

6. Valuation & Outlook

Using a forward‑looking discounted cash flow (DCF) model, Hennessey derives a target price of $1,800 per share—representing a +45 % upside from the current market price (as of 4 September 2025). The valuation is underpinned by an assumed 10 % annual revenue growth through 2030 and a steady gross margin of 27 %.

The author also references the S&P 500 Energy Index as a benchmark for “green” stocks, noting that Tesla’s price trajectory has already outperformed the index by a factor of 1.7 since 2020. He cites the US Treasury’s 2025 Green Bonds issuance, which is expected to fuel infrastructure investment that could indirectly boost EV demand.

7. Conclusion

In closing, Hennessey emphasizes that Tesla’s “sunnier skies”—the potential upside from Solar Roof and Powerwall—are not a prerequisite for a compelling investment thesis. Instead, the company’s robust EV pipeline, superior manufacturing scale, and AI‑driven innovation ecosystem are the primary sources of value. He urges investors to view Tesla as a long‑term growth play that offers both a stable dividend stream (through its $2 billion annual dividend policy proposed in the latest shareholder meeting) and a high‑growth upside that has yet to be fully priced into the market.

References (in original article)