Tesla shares rebounded 3% on news of increased production in Shanghai and strong sales in China, despite pressure from competitors.
Tesla ramps up production in China, shares rise 3%
Tesla shares (TSLA) jumped more than 3% on Monday as President Donald Trump softened his tough rhetoric on China. Along with the general market recovery, the company received new momentum — this time from Shanghai.
As reported by Reuters, Tesla Vice President Tao Lin announced on Weibo that the Shanghai gigafactory began to increase production rates in the fourth quarter. This is a key period for the company: Q4 is traditionally when Tesla records the highest delivery volumes.
China Remains Key Market
Tesla sold 71,525 vehicles in September, its second-best year-to-date figure after March’s 74,127, according to the China Passenger Car Association (CPCA). Sales were up 25% month-on-month, though flat year-on-year.
The company’s share of the Chinese electric car market rose to 8.66% from 8.33%, driven by its new Model YL, a three-row, six-seat SUV designed specifically for China.
“The YL allows Tesla to compete in the large electric SUV segment,” the CPCA said.
Model Y deliveries (including exports) rose 17% to 59,000 units in September.
Global Context: Demand, Competition, and Tax Changes
A positive momentum in China has supported Tesla shares after a 30% gain in September on the back of hype around artificial intelligence. But analysts warn that the company could be held back in the fourth quarter by the loss of a federal EV tax credit in the U.S., which will dampen domestic demand.
“Fundamentals don’t matter”?
Barclays analyst Dan Levy stressed that Tesla remains “the original meme stock” with a hugely active retail investor base.
“Fundamentals don’t matter much. The stock is driven by technical factors — options, ‘Mag 7’ momentum and retail activity,” Levy said on CNBC.
Next catalyst: earnings
Investors are closely watching Tesla’s third-quarter earnings report on Oct. 22.
Whether the company can prove its ability to maintain its delivery pace and margins in the face of new competition may determine the next surge or correction in the stock.
Related: Tesla introduced the cheapest models Model 3 and Model Y — from $36,990
