TSLA shares pared losses, edging higher Tuesday after data showed Tesla (TSLA) vehicle insurance registrations surged in China last week. In addition, a top analyst forecast Tesla demand would grow as China’s latest Covid wave seems to be subsiding, and with the Chinese New Year celebrations now in the rearview mirror.
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The global EV giant saw 8,643 insurance registrations in China for the week of Jan. 30-Feb. 5, a 157% increase from the 3,356 registrations two weeks ago. Last week was the first official workweek after the Chinese New Year, but many people’s holiday extends to Feb. 5, according to CnEVPost.
The Chinese New Year holiday, which ran from Jan. 21-27, significantly affected car companies’ sales across the board in China. Tesla Shanghai was among those shut down for an extended Lunar New Year holiday. But the company had significant inventory from year-end production.
Last week, China EV sales rebounded broadly. Top Tesla competitor BYD (BYDDF) had 24,280 total insurance registrations for the week, up 360% compared to a week prior.
China-EV startups Li Auto (LI) had 2,240 registrations, Nio (NIO) saw 1,948 and XPeng (XPEV) totaled 975.
Tesla stock dropped early before ending Tuesday market trade up 1% to 196.80. On Monday, TSLA shares gained 2.5% to 194.70. Tesla stock has gained 58% on the year and is in the midst of a 91% run since it hit Jan. 6 bear-market lows of 101.81.
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On Monday, Wedbush analyst Daniel Ives, a longtime Tesla bull, increased his Tesla stock price target to 225, up from 200.
Ives cited China demand “going from a headwind to tailwind” for Tesla. The Wedbush analyst wrote that increased EV demand in China “is just starting to hit its stride and should be a tailwind in 1Q” for Tesla.
Tesla sold 66,051 China-made vehicles in January, a 10.4% increase compared to a year ago and up 18.4% vs. December. The sales numbers, released by the China Passenger Car Association on Feb. 3, do include exports.
Tesla plans to produce an average of nearly 20,000 vehicles a week at its Shanghai plant in February and March, according to Reuters, a signal that the global EV giant is expecting increased demand. That puts monthly production on track to roughly match September levels of 82,000 vehicles.
On Jan. 6, Tesla slashed prices for the Model 3 and Y in China, with the base Model 3 cut more than 13% to $33,570. The EV giant also cut prices in other Asian markets that day, with further cuts in Korea on Feb. 3.
“The price cuts have swayed three of every four EV buyers in China based on our survey work in China,” Ives wrote Monday. He also said Tesla’s “unmatched ability to scale its production operations in China” was meaningful to margin stability.
“Domestic players such a BYD, Nio, and XPeng remain very formidable competitors but ultimately we believe market share shifts are now favoring Tesla in China,” Ives added.
TSLA shares rank fourth in the Auto Manufacturers industry group. Tesla stock has an 62 Composite Rating out of 99. The stock has an 12 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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Source: https://www.investors.com/news/tesla-stock-rally-continues-as-china-market-share-shifts-now-favor-tesla-analyst/?src=A00220&yptr=yahoo