Tesla’s (TSLA) Giga Berlin is up and running and the company has been playing host at the new manufacturing plant. Deutache Bank’s Emmanuel Rosner took a visit and came away with a sense Tesla’s new “localized vehicle production in Europe could be a game-changer, making Tesla to an even more formidable competitor in the region, while likely boosting the company’s gross margins.”

When the company reported Q2 earnings, management noted the facility had already reached positive gross margins. Tesla eventually expects production cost per vehicle in Berlin to more resemble that of Shanghai and come in under that of Fremont. Fremont exceeds the average $36,000 COGS/vehicle, while at Shanghai it is lower. With both the Berlin and Austin factories attaining COGS more akin to Shanghai, general company COGS should improve.

“Combined with saving the large cost of import duties and shipping compared to importing the vehicles from China to Europe, this could potentially result in better reported margins out of Berlin, even after accounting for higher labor cost,” Rosner noted.

Production in Berlin is expected to reach 500,000 Model Ys per year, but the plant is presently staffed with just 2 shifts; Tesla intends on increasing that to 4 shifts and plans on achieving full production sometime next year.

Regarding the potential of a gas crisis in Germany, Tesla conceded the factory’s energy supply is like that of other OEMs located there but stressed its “strong flexibility in steering its global vehicle production to regions where it sees strong demand.”

Generally, the company says demand remains “strong,” and still exceeds its supply capabilities. “This is certainly the case in the US,” notes Rosner, “and could become even more acute after the Inflation Reduction Act takes effect in January 2023.”

All told, Rosner is of the mind 2023 could be a “pivotal year” for Tesla and the analyst sees the company as “one of the most attractive stories in the autos sector.”

As such, Rosner rates TSLA stock a Buy, while his $375 price target implies 12-month share appreciation of ~36%. (To watch Rosner’s track record, click here)

Rosner’s objective is one of the Street’s more upbeat ones. According to TipRanks, among 30 analysts who cover TSLA, the average price target is $314.58. This suggests potential upside of about 14% from the current price. (See Tesla stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.