Tesla Stock Nears New Entry Point On Strong China Sales

By ADELIA CELLINI LINECKER

The China Passenger Car Association reported strong September electric vehicle sales in China Tuesday, with Tesla posting booming local sales. Tesla rose Tuesday.

Tesla sales wholesales were 56,006, signaling another big jump in overall production as well. That includes 52,153 local, retail sales and 3,853 vehicles for export.

Local sales included 33,033 made-in-China Model Y crossovers. In July, Tesla unveiled a cheaper, lower-range made-in-China Model Y. Its lower price makes the vehicle eligible for government subsidies, which brings the price down to $42,600. That's about 20% less than the longer-range Model Y.

In August, Tesla Shanghai's monthly sales were 44,264 units — the first time it surpassed 40,000 in a single month. But exports hit a record high of 31,379, with local sales of just 12,885.

Tesla now exports the bulk of its Shanghai production in the first two months of the quarter, mostly to Europe, sending the Model Y to Europe for the first time. That limits local sales. September production was largely delivered to local customers.

Typically, registration and insured vehicle data released by the China Automotive Technology & Research Center are considered the more robust figures. CPCA's wholesale sales and CATARC's insurance registration figures usually match fairly closely, but in August, Tesla sales were roughly 10,000 lower by CATARC's count than CPCA's. That discrepancy may get balanced out in September's data, but CATARC will come later in the month.

China EV Demand Surges

Tesla's Shanghai factory makes the Model 3 sedans and Model Y sport-utility vehicles for domestic and international markets.

"China demand rebounded in the quarter and is clear indicator of the step up in EV demand taking place globally with China leading the way," wrote Wedbush analyst Daniel Ives in a note to clients Tuesday.

Ives said in an earlier report that China's robust demand for EVs in the quarter will be a focus for investors heading into Tesla earnings in a few weeks.

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Tesla Q3 Deliveries

Tesla reported record third-quarter deliveries earlier this month, racing past estimates, despite chip shortages.

It delivered 241,300 electric vehicles in Q3, up from 201,250 in Q2 and 184,800 in Q1. The Q3 total beat FactSet analyst consensus of 232,000.

The EV giant delivered 232,025 Model 3 and Y vehicles in the third quarter, as well as 9,275 Model S and X vehicles.

Tesla Stock: Berlin Factory Impact

Ives said in an Oct. 10 report that the Berlin factory should start producing cars over the next month.

Right now, many Model 3 and Model Y vehicles produced in China are exported to Europe, including a significant number in September, Ives wrote.

Ives says this is "a logistical nightmare that is not sustainable and thus pushing back delivery times for customers throughout the region with Berlin alleviating this issue once the factory is ready to roll."

China EV Sales

On a quarterly basis, Tesla China's sales totaled 133,218 in Q3, a 44% surge vs. Q2.

Tesla's China-based rivals already reported September and third-quarter sales. China's Nio doubled EV sales in the third quarter, beating its own guidance. Meanwhile, Xpeng and Li Auto nearly tripled Q3 sales and also beat estimates. China EV and battery giant BYD also nearly tripled EV sales.

Xpeng, Nio and BYD have begun selling EVs in Norway, kicking off their European expansion.

Tesla Stock

Shares rose 1.7% to 805.72 on the stock market today. Tesla stock is in a three weeks tight pattern with an entry at 807.07.

Its relative strength line is trending up, according to MarketSmith. Tesla's RS Rating is 85 out of a best-possible 99, while its EPS Rating is 72. With a Composite Rating of 96, Tesla currently ranks No. 1 in IBD's auto manufacturers group. Tesla is a Leaderboard stock.

Nio stock lost a fraction, while Xpeng inched up 0.6%. Li Auto stock dipped 0.7%. BYD stock popped 4.3%.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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