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The China Passenger Car Association is expected to release July sales figures on Tuesday, with You’re here (TSLA) focus on deliveries and exports. Tesla stock rose on Monday, recovering an early buy point.
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Wedbush analyst Daniel Ives told IBD on Monday that he expects Tesla’s overall sales in China “to pick up modestly and increase by around 5% from June figures.”
Tesla delivered 33,155 electric vehicles in June, down slightly from 33,463 in May.
But July sales data won’t provide much clarity regarding Tesla’s local demand. Most of Tesla Shanghai’s production will go to Europe. Tesla has just started exporting the Chinese-made Model Y to Europe, the first time the crossover will reach this highly competitive electric vehicle market. The Shanghai plant has already largely replaced the Fremont plant as the Model 3 export center.
So, like Europe and other key markets, investors should assess Tesla’s local sales in China on a quarterly basis, rather than focusing on a month.
Tesla China’s local sales fell about 16% in the second quarter compared to the first quarter. This despite an increase in sales of the Model Y as Chinese production increased. Sales of the Chinese-made Model 3 fell significantly from the first quarter.
Tesla set a record for quarterly deliveries, roughly meeting second-quarter expectations. The electric vehicle maker said its global deliveries rose 120% to 201,250 vehicles, from a previous record of 184,800 in the first quarter and 90,900 a year ago.
Tesla began long-delayed deliveries of the Model S Plaid, the revamped version of the luxury sedan, in June. But we didn’t expect these to escalate anytime soon. It is not known if Tesla makes Model X vehicles.
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Cheaper Y model
Last month, Tesla also unveiled a cheaper, lower-end, Chinese-made 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 Model Y at long range.
Deliveries of the cheaper Model Y will not appear in July sales data, but could begin as early as this month.
Tesla briefly sold a Model Y SR + in the United States, but it was quickly discontinued due to limited demand.
Tesla’s Chinese rivals
Tesla’s rivals based in China Li Auto (LI) and Xpeng (XPEV) posted record car sales in July. Li Auto sales in July jumped 251% year-on-year to 8,589 units, while Xpeng sales jumped 228% to 8,040 cars.
Li Auto sales in July were also up 11% from June. Xpeng’s sales are up 22% from last month.
Nio (NIO) delivered a total of 7,391 vehicles in July, up 125% from the previous year, but down from 8,083 in June.
Chinese electric vehicle giant WORLD (BYDDF) reported electric vehicle sales of 24,996 in July, up 109% from the previous year. Its sales of plug-in hybrids soared 463% to 25,061.
Tesla is reportedly starting to use BYD blade batteries for some electric vehicles made in China next year. It is already using batteries from the Chinese giant CATL.
Tesla shares
The shares rose 2.1% to 713.76 in the stock market today. Tesla stock has risen back above an early entry at 700.10, according to MarketSmith chart analysis.
The Leaderboard action can be found in a buy zone that extends to 735.11. Tesla recently found support at the 40 week line on its weekly chart. Now he’s spending some time above his 10-week moving average.
Still, TSLA stock remains around 20% below its all-time high of 900.40 reached on January 25.
Its relative strength line tends slightly upward, but remains weak. Tesla’s RS rating is 87 out of a possible 99. His EPS rating is 72.
Among other electric vehicle stocks, Nio and Xpeng each climbed around 3%, and Li Auto rose 1.1%. BYD stock fell 1.5% after nearing an all-time high last week.
Production delays
China accounts for 30% of Tesla’s sales. It is the second largest market for the electric vehicle maker, behind the United States.
Global chip and battery shortages have thwarted Tesla’s growth plans. In a call to investors after the second quarter results, CEO Elon Musk said, “The global chip shortage situation remains quite severe; it’s hard to say how long that will last. It’s basically out of our control. . Looks like it’s improving but it’s hard to predict. “
But other supply chain issues have also reduced global auto production, giving pricing power to Tesla and other automakers. Tesla announced several price hikes in the United States in 2021.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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