April shipments to China appear modest, but Bull’s thesis remains intact, analyst says

Figures are for Tesla (TSLA) April shipments to China, and they’re not what investors wanted to see.

Data from the China Passenger Car Association (CPCA) shows that during the month, Tesla sold 25,845 electric vehicles. While this figure is higher than the 15,484 vehicles sold in January and the 18,318 deliveries in February, it is down sequentially from the 35,478 deliveries in March.

Compared to domestic competitors Nio, Xpeng and Li Auto, market share gains also stagnated. Wedbush Analyst Daniel ives counts a “handful of negative public relations issues in China resulting from well-discussed security concerns, noise from military spies and the demonstration at the Shanghai Auto Expo”, as playing their part in the poor performance.

Additional questions are also expected to arise after the company halted plans to purchase more land for the expansion of its flagship Shanghai Giga plant. Ives believes that “growing tensions between the United States and China and tariff issues” are the cause of the project’s hiatus.

Additionally, Ives says production and logistics are under pressure from chip shortages, making it difficult to “meet demand globally.” In Europe, for example, demand “remains robust”, as evidenced by the 14,174 additional vehicles the company shipped to this “key region” in April.

However, it is in China, where Tesla “needs to play nicely in the sandbox with Beijing and iron out the PR issues in the region that have been a black eye for Tesla over the past month.” After all, this is the region where a large chunk of Tesla’s revenue will come from over the next two years.

Despite the weak data for April, Ives believes demand in China puts Tesla “on an annual operating rate of over 300,000,” and the country will account for about 40% of shipments by 2022.

Overall, Ives assesses TSLA shares an outperformance (ie a buy) with a price target of $ 1,000. Tesla shares struggled in 2021 and hitting Ives’ target could generate returns of around 70%. (To look at Ives’ palmares, Click here)

Not all analysts on the street are voicing Ives’ bullish outlook for the electric car giant, as TipRanks analysis presents TSLA as an expectation. Based on 24 analysts surveyed in the past 3 months, 11 say Buy, 6 suggest Hold, while 7 recommend Sell. The 12-month average price target is $ 645.95, which is 9.5% up from current levels. (See Tesla share analysis on TipRanks)

To find great ideas for trading EV stocks at attractive valuations, visit TipRanks’ Best stocks to buy, a newly launched tool that brings together all the knowledge about equity from TipRanks.

Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.


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