Tesla (TSLA) Sales in China 'Stagnated' in April, Wedbush Notes

May 11, 2021 8:07 AM EDT
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Wedbush analyst Daniel Ives notes softness in Tesla (NASDAQ: TSLA) China sales data for April.

According to China Passenger Car Association (CPCA) data, Tesla sold 25,845 EVs in the month of April which were down sequentially from 35,478 in March and up significantly from the months of January (15,484) and February (18,318).

Importantly, Tesla also shipped out an additional 14,174 cars to Europe during the month of April as demand in Europe remains robust with more exports going to this key region, Ives added.

"Tesla's share gains stagnated vs. domestic players Nio, Xpeng, and Li Auto during the month as the company faced a handful of negative PR issues in China stemming from well discussed safety issues, military spy noise, and the protest at the Shanghai Auto Expo," Ives notes. 'In addition, it appears Tesla halted plans to buy additional land to expand its flagship Shanghai Giga factory in light of rising US/China tensions and tariff issues which will raise some questions."

Ives said, taking a step back, Tesla is clearly facing chip shortage issues which is putting more pressure on production and logistics to fulfill demand globally and speaks to more cars heading to Europe this month than the Street expected.

"We believe overall China demand is on a 300k+ annual run rate and is poised to represent roughly 40% of deliveries for Tesla by 2022. That said, clearly Musk & Co. need to play nice in the sandbox with Beijing and smooth out PR issues in the region which have been a black eye for Tesla over the last month and clearly impacted China sales negatively in the month of April which the Street will react with a sell-off in shares this morning."

The analyst reiterated an Outperform rating and $1,000.00 price target on Tesla.

For an analyst ratings summary and ratings history on Tesla click here. For more ratings news on Tesla click here.

Shares of Tesla closed at $629.04 yesterday.

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