Tesla (TSLA)’s sales in China climbed in February, while local competitors declined, indicating the increase in market share in the world’s largest auto market. Tesla stock jumped.
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The China Passenger Car Association reported that Tesla sold 18,318 Model 3s and Model Ys in Shanghai in February, an increase of 8% from the 15,484 sold in January.
Meanwhile, it Xpeng (XPEV) delivered 2,223 EVs in January compared to 6,015. Nine (NIO) sold 5,578 compared to 7,225 in January. Li Auto (LI) delivered 2,300 Li ONEs, up from 5,379 in January. Warren Buffett Supported BYD (BYDDF) sold 10,355 new energy vehicles last month compared to 20,178 in January.
While consumer activity slowed during the lunar New Year holiday last month, Wall Street was a positive profit for Tesla.
“We believe that price reductions and the introduction of Model Y were the key to some of these changing market dynamics in China,” Wedbush analyst Daniel Ives said in a note to clients. “That said, total EV demand in the region looks robust with EV penetration rising from China by 4.5% by 2020 to 2022 in this EV arms race with Tesla and its Giga footprint in front and in the middle. “
Overall, February vehicle sales in China reached 97,000 electric cars in China, the CPCA said it was down 38% from January, partly due to the week-long holiday.
Tesla is “on course to be on a 200,000+ unit path in China during the year, which continues to be a key role for the company, which achieves its annual numbers of 750,000 to 800,000 for the year,” Ives added.
It maintains a neutral rating on Tesla stock with a price forecast of 950. Meanwhile, New Street Research analyst Pierre Ferragu upgraded Tesla shares to a buy with a price target of 900.
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Tesla Stock
Shares rose about 10% on the stock market today to 619.60, but still below the 50-day moving average. The Tesla stock has tumbled over the past few weeks and, according to MarketSmith’s chart analysis, is almost 33% lower than the 52-week high of 900.40. Its relative strength line is declining.
The Nio share rose 12%, Xpeng jumped 16.5% and Li Auto jumped 15%. BYD added 9%.
A global shortage of chips has disrupted production at Tesla factories and other automakers. But some viewers in the industry have long singled out Tesla shares as overvalued. They also pointed out that it is increasingly vulnerable to declining demand and price reductions as competition in the EV market increases.
Recently, Ford (F) reported that it sold 3,739 Mustang Mach-E electric vehicles in February, a rival of Tesla’s Model Y.
Analysts at Morgan Stanley said in a recent note that Ford Mustang Mach-E acquired an EV share last month at the expense of Tesla. US EV sales rose 34% in February, while Tesla’s share fell to 69% from 81% the previous year. “The Ford Mustang Mach-E accounted for almost 100% of the share loss,” they said.
But Wedbush’s Ives are optimistic that the sharp downturn in the Tesla share is temporary.
“Tesla’s fortress in the EV market will continue on the heels of Model 3 success by 2021 in both Europe and China, especially with a green tidal wave catalyzing consumer demand worldwide,” he said.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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