Tesla shares jump 20% amid strong sales in China in February

Tesla shares rose sharply on Tuesday after the company posted 18% growth in sales of its electric vehicles in February compared to January, which contrasts with declines in sales from Chinese competitors.

Tesla (TSLA) shares, down 21% in the past month, surged on Tuesday 19.64% to $ 673.58, their strongest one-day gain in nearly a year.

Tesla’s shares rose amid a general recovery in the market, as well as data on the company’s sales in China from the China Automobile Association and an increase in Tesla’s stock valuation from analyst New Street.

Major US stock indexes on Tuesday recovered some of their losses over the past week: the S&P 500 rose 1.42%, the Nasdaq Composite rose sharply by 3.7%, the Dow Jones added 0.1%. Amazon (AMZN) and Microsoft (MSFT) were up 3.76% and 2.81%, respectively, the largest one-day gains in five weeks.

Tesla sold 18,318 vehicles made in China in February, up 18% from 15,484 vehicles in January, the China Passenger Car Association (CPCA) said. This contrasts with the drop in sales reported by BYD, Nio (NIO), Xpeng (XPEV) and Li Auto (LI), citing low season and Chinese New Year.

Wedbush analyst Daniel Ives commented on Tesla’s results as “very impressive” and ahead of Wall Street’s expectations.

“We believe that in terms of performance, Tesla is on track to reach more than 200,000 units in China and a 2021 total of 750,000 to 800,000 EVs. From a manufacturing standpoint, Tesla produced 23,600 Model 3 / Ys in about 21 days in February in China, and some of those vehicles were shipped to Europe, ”Ives wrote.

“We believe the price cuts and the introduction of the Model Y have played a key role in some of these changes in market dynamics in China.

Overall demand for EVs in the region looks robust as EV penetration is set to rise from 4.5% in China in 2020 to 10% by 2022 in this EV race involving Tesla, ”adds Ives.

Thus, the analyst sees good prospects in the Chinese market for Tesla in March, predicting that the company will gain an even larger market share in this key region in the coming years.

Ives retained a target price for Tesla shares of $ 950 and a rating of “neutral” (“hold”).

New Street Research analyst Pierre Ferragou upgraded Tesla’s rating from Neutral to Buy and raised its price target from $ 578 to $ 900, saying the company has clear catalysts to significantly increase shipments over the next two years, while annual shipments could quadruple in three years.

Ferrago predicts Tesla’s annual earnings per share could rise to $ 12 in 2023 – 50% higher than the currently forecast average analyst estimate.

The median forecast of analysts foresees an increase in Tesla’s annual revenue from less than $ 32 billion in 2020 to $ 48 billion in 2021 and $ 63 billion in 2022.

Proof of the continued strong demand for Tesla vehicles in the United States is provided by the delivery time data on the company’s website, noted by Teslarati. This time frame has increased compared to a few weeks earlier: the Model 3 is now shipping not from two to four weeks, but has been updated to “June”, ie. up to 14 weeks. For the Model Y, the delivery window from two to five weeks was changed to 7 to 11 weeks.

Deliveries of the refreshed Model S and X were supposed to begin in February or March, but so far there has been no documented shipment of refreshed models.

LG Energy Solution may supply new battery cells for Tesla in 2023 in the US or Europe, Reuters reported, citing anonymous sources, but the company has not yet confirmed.

Tesla has started pilot production of new battery cells at its California plant and is considering making them at new plants in Texas and Germany as well.

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