Piper says Shanghai Gigafactory rumors ‘easier to understand’ amid weak November

Piper Sandler analyst Alexander Potter notes that overnight, the China Passenger Car Association, or CPCA, released data regarding vehicle sales in November. Retail sales fell by 9.5% versus 2021, but notably, sales have now fallen sequentially for two straight months. This is the first time since 2008 that China’s car market has declined month-mover-month in both October and November, which are two of the seasonally strongest months in the year, the analyst notes. The November result implies an annualized sales rate of only 17.2M units. Potter points out that December is typically the strongest month of the year, historically accounting for 10.9% of full-year sales. So, if recent downward momentum isn’t addressed through loosening COVID restrictions, then widespread production cuts may be necessary, the analyst says, adding that in this context, it’s easier to understand recent murmurs regarding lower production at Shanghai Gigafactory. Potter has an Overweight rating on Tesla’s shares with a price target of $340. Piper says weak November in China’s car market sheds light on Tesla Shanghai Gigafactory news