Tesla Stock Slips As China EV Registrations Rise Again

Tesla (TSLA) insurance registrations in China increased for the second straight week, as Tesla’s top competitors in China saw registrations retreat. TSLA stock edged lower Tuesday, testing a key level but not far from a buy point.

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Tesla had 13,266 insurance registrations for the week of Feb. 27-Mar. 5, up 24% from the 10,705 in the prior week. The global EV giant had 10,157 Model Y registrations and 3,109 Model 3 registrations. Tesla’s increased weekly insurance registrations in China follows that number nearly doubling for the week of Feb. 20-26.

But Tesla China’s local sales may not be on track to match Q4’s pace, even with big price cuts on Jan. 6.

Total insurance registrations for new energy vehicles (NEVs) in China last week grew nearly 4% to 116,238 units, according to CnEVPost. Meanwhile, insurance registrations for all-passenger vehicles in China gained 4.3% to 345,340 compared to the week prior.

Tesla’s top competitors recorded insurance registration declines last week.

BYD (BYDDF) had 38,932 total insurance registrations, down 1% compared to the week prior. BYD dealers recently cut prices on many models, joining China’s big price war started by Tesla. Denza, the luxury EV manufacturer 90%-owned by BYD and 10% by Mercedes-Benz (DDAIF), had 1,808 insurance registrations last week, sliding 7% from the previous week.

China-EV startups Li Auto (LI) saw registrations fall 40% to 3,222, Nio (NIO) registrations slipped less than 1% to 3,345  and XPeng (XPEV) registrations decreased 15% to 1,421.

Tesla stock retreated 3.2% to 187.54 Tuesday during market trade. On Monday, Tesla stock shed 2% to 193.81.

TSLA China Sales Jump In February

In February, Tesla China sales rose solidly vs. a year earlier, according to data released Friday by the China Passenger Car Association.

Tesla sold 74,402 China-made vehicles last month. That was up nearly 13% increase compared to January and 32% sales growth compared to the 56,515 last year. The majority were likely exports to Europe and elsewhere, but it’s not yet clear how many Tesla EVs were exported and how many were sold locally.

Other China EV makers also mostly reported significant sales increases in February vs. January.

In the first two months of 2023, Tesla sold 140,453 China-made vehicles, up 21% from the same period in 2022. That reflects higher production capacity, existing inventory from the start of the year and big price cuts.

In mid-February, Bloomberg reported Tesla would pause some output at its Shanghai plant starting Feb. 19 to retool production lines for a Model 3 upgrade coming later this year. This would be the third shutdown of the Shanghai plant in less than two months. Tesla reportedly upgraded production lines in stages over the past two months, with deliveries of the new Model 3 sedan expected to begin later this year, according to Bloomberg. The global EV giant has not confirmed reports of a new Model 3.

Tesla planned to produce an average of nearly 20,000 vehicles a week at its Shanghai plant in February and March, according to Reuters, citing sources, but it’s not clear that happened. Last year, Tesla Shanghai upgrades affected output in July and early August.

Tesla’s local sales in China have tended to ramp up in the latter half of the quarter, after Shanghai prioritizes exports earlier. Tesla sold 66,051 China-made vehicles in January, a 10.4% increase compared to a year ago and up 18.4% vs. December. Of those deliveries, the global EV giant exported 39,208 vehicles from its Shanghai plant.

However, Tesla’s Shanghai exports to Europe, combined with higher Berlin output, have created a supply-demand imbalance there. Tesla recently cut prices by roughly 6% for Model 3 and Y inventory there, on top of major European price cuts on Jan. 13.

Tesla also cut U.S. Model S prices by $5,000 on March 5, with Model X prices down $10,000.

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Tesla Stock

TSLA stock lost more than 3% in market trading Tuesday. Shares fell 2% on Monday to 193.81, just above the 21-day moving average.

Tesla stock has paused below the 200-day moving average after a huge run to start the year. Aggressive investors could use 217.75 as a buy point, according to MarketSmith analysis. However, to be safe, Tesla stock should clear the 200-day line, which is now around 220.

Jefferies on Monday raised the firm’s price target on Tesla stock to 230, up from 180. The firm maintained a “Buy” rating on TSLA shares. Jefferies analyst Philippe Houchois wrote a lack of new product announcements during Tesla’s investor day does not imply major growth delays.

Tesla stock ranks fifth in IBD’s Auto Manufacturers industry group. The group itself ranks No. 66 out of the 197 industry groups tracked by IBD.

Tesla stock has a 72 Composite Rating out of 99. The stock also has a 22 Relative Strength Rating. The EPS Rating is 99.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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