Tesla (TSLA) shares were higher on Tuesday, as weekly vehicle registration data from China shows a first sales spurt for the global EV giant after it cut prices in China in the first week of January.
Tesla China EV registrations were 12,654 for the week of January 9-15, up 500% from the previous week’s 2,110. Total sales of all passenger cars in China this week were 437,700 units. That is 14% less than in the previous year and 50.5% more than in the previous week.
Tesla’s Chinese competitor BYD (BYDDF) continued to lead the automaker field with 40,420 registrations. EV startups Li car (LI) and no (NIO) and XPeng (XPEV) sold 4,527, 2,974 and 1,817 respectively this week.
XPeng, which competes in the same price segments as Tesla, cut prices on most of its models early Tuesday. That follows a similar move by Aito, which is backed by Huawei.
Tesla shares rose 7.4% during trading on Tuesday to 131.44. TSLA shares are up 8.3% last week, continuing their rebound from the January 6th bear market low of 101.81. A number of analysts have also rated Tesla stock and lowered price targets.
Tesla price cuts
The latest registration numbers seem to reflect some benefits of Tesla’s Jan. 6 decision to cut prices in China. Tesla cut prices for the Model 3 and Y in China, with the base Model 3 dropping more than 13% to $33,570. According to CnEVPost, local media reports in China suggest that Tesla received 30,000 orders within three days of the announced cuts.
But will the surge in demand continue? Tesla Shanghai exports, the upcoming Chinese New Year holiday – including another Shanghai plant shutdown – as well as the ongoing Covid wave could mean it will be several weeks before there is a clear sense of Tesla’s local demand.
Tesla also announced big price cuts in the US and Europe on Friday. Tesla stock closed slightly lower on Friday, even though the price cuts qualified more of the company’s models for a $7,500 tax incentive under the Inflation Reduction Act (IRA).
On Tuesday, Wells Fargo analyst Colin Langan told investors that Tesla’s price cuts could put pressure on the entire auto industry to react. Langan thinks the cuts are likely to attract buyers who haven’t previously considered Tesla.
Meanwhile, Bank of America analyst John Murphy lowered the company’s price target on Tesla shares to 130 from 135 on Tuesday. Murphy kept a “neutral” rating on TSLA shares.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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