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BofA/Merrill Lynch Calls Panasonic Initial Investment in Tesla (TSLA) Gigafactory 'Mini'; Co. May Have to Tap Public Markets

July 28, 2014 3:38 PM EDT
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BofA/Merrill Lynch analyst John Lovallo weighed in on Tesla Motors (NASDAQ: TSLA) amid reports Panasonic has agreed to a small initial investment of $200-$300 million in Tesla's planned Gigafactory.

Lovallo called it a "relatively small initial investment appears to reflect hesitancy on the part of the battery maker to fully commit." He notes that Tesla is seeking $2-$3 billion.

"In our view, Panasonic is essentially choosing to purchase a call option on Tesla's future, but likely shares our concern that most automakers and consumer electronics companies are pursuing battery technologies that are not compatible with Tesla," the analyst said.

He added, "In fact, early reports suggest that global OEMs have expressed little interest in Tesla's patent portfolio, despite the company's "open-source" initiative. As a result,Tesla may ultimately need to tap the public markets for a significant capital raise if it intends to push forward with the Gigafactory."

The firm maintained an Underperform price target of $75.00

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $223.57 yesterday.



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