Tesla: April China Deliveries Look Soft, But the Bull Thesis Remains Intact, Says Analyst

The numbers are in for Tesla’s (TSLA) April deliveries in China, and they are not what investors wanted to see.

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

Compared to domestic rivals Nio, Xpeng, and Li Auto, the market share gains have stagnated, too. Wedbush analyst Daniel Ives counts 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,” as playing their part in the weak performance.

Additional questions are also likely to come to the fore after the company has put the brakes on its plans to purchase more land for the expansion of its flagship Shanghai Giga factory. Ives thinks “rising US/China tensions and tariff issues” are behind the project’s pause.

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

However, it is in China, where Tesla “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.” After all, this is the region where much of Tesla’s revenue will come from over the next couple of years.

Despite the weak April data, Ives thinks the demand in China puts Tesla “on a 300k+ annual run rate,” and the country will account for approximately 40% of deliveries by 2022.

All in all, Ives rates TSLA shares an Outperform (i.e. Buy) along with a $1,000 price target. Tesla shares have had a rough ride in 2021, and hitting Ives’ target could yield returns of ~70%. (To watch Ives’ track record, click here)

Not all analysts on the street voice Ives’ bullish forecast for the electric car giant, as TipRanks analytics showcase TSLA as a Hold. Based on 24 analysts polled in the last 3 months, 11 say Buy, 6 suggest Hold, while 7 recommend Sell. The 12-month average price target stands at $645.95, marking a 9.5% upside from current levels. (See Tesla stock analysis on TipRanks)

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