Tesla Stock Gets Downgrade As China Registrations Ramp Up

Tesla (TSLA) insurance registrations in China continued to increase last week, growing for the third consecutive week, as top Tesla competitor BYD (BYDDF) stagnates. TSLA shares advanced Tuesday.

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Tesla had 17,032 insurance registrations for the week of March 6 to 12, up 28% from the 13,266 in the prior week. The global EV giant had 11,336 Model Y registrations last week and 5,696 Model 3 registrations. Tesla saw its Mode 3 numbers increase 83% compared to the previous week. Registrations provide a de facto measure of new car sales in China.

Tesla insurance registrations in China have increased steadily since that number nearly doubled for the week of Feb. 20-26. The EV company’s past-week China insurance registrations skyrocketed 144%, compared to the month-ago number of 6,963 for Feb. 6-12. Registrations that week lagged due to the country’s Lunar New Year holiday.

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

BYD had 37,141 total insurance registrations, down 5% compared to the week prior. The China-based auto giant saw its insurance registrations drop 1% for the week of Feb. 27 to March 5. 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 1,853 insurance registrations last week, increasing 2% compared to the previous week when it slid 7%.

China-EV startups Li Auto (LI) saw registrations increase 32% to 4,243, Nio (NIO) registrations slipped 35% to 2,170 and XPeng (XPEV) registrations grew 15% to 1,635.

Tesla stock jumped 3.5% to 180.60 Tuesday during market trade. TSLA shares ended Monday up 0.6% to 174.48.

Tesla 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’s nearly a 13% increase compared to January and 32% sales growth compared to the 56,515 last year. Tesla sold 51,412 China-made Model Y vehicles and 22,990 Model 3 vehicles.

The majority (54%) of those vehicles were exported to Europe and elsewhere. Tesla exported 40,479 vehicles in February, up more than 3% vs. January and a 22% increase compared to a year ago. That means Tesla delivered 33,923 vehicles domestically in China throughout the month. Tesla generally focuses on exports in the first half of each quarter.

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

TSLA Stock

Tesla sold off hard last week, falling 12.3%. However, TSLA found support at its 10-week moving average on Friday.

On Monday, Wolfe Research downgraded Tesla to a “Peer perform” rating down from “Outperform.” The firm did not include a Tesla stock price target. Analyst Rod Lache noted the collapse of SVB Financial adds to macro pressures.

Lache told investors the current economic environment could specifically affect U.S. EV manufacturers as consumers could cut out auto purchases until they feel more financially stable.

“We’re still convinced of Tesla’s impressive cost trajectory, which should propel impressive growth over time. However, we’ve also become incrementally more concerned about macro challenges,” Lache wrote.

Wolfe Research’s Tesla stock downgrade is the latest after investment bank Berenberg last week dropped Tesla to a “Hold” rating, from its previous “Buy” designation. At the same time, analyst Adrian Yanoshik increased his TSLA price target to 210, up from 200. That’s about 17% above Monday’s closing price.

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

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