Tesla's February Sales Growth In China Shows 'Major Directional Swing,' Analyst Says

Tesla, Inc. TSLA has defied the odds and reported a month-over-over increase in deliveries for February, according to data released by the Chinese Passenger Car Association.

The Tesla Analyst: Wedbush analyst Daniel Ives has a Neutral rating and $950 price target for Tesla shares.

The Tesla Thesis: Tesla delivered 18,300 vehicles in China in February, representing an 18% increase from January and signaling a snapback in demand for Tesla in the key China region, Ives said in a note.

All three U.S.-listed Chinese electric vehicle manufacturers reported last week with month-over-month declines in deliveries for February.

The month-over-month growth for Tesla is impressive, as it came despite the Lunar New Year holidays in China taking up a significant portion of February, the analyst said.

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The company is likely to hit an annual run rate of over 200,000 units in China in 2021, which remains a linchpin for achieving overall deliveries of 750,000-800,000 units for the year, he said.

From a unit perspective, Tesla's month-over-month deliveries growth — as opposed to declines reported by BYD Company Limited BYDDF, Nio Inc – ADR NIO and XPeng Inc – ADR XPEV and Li Auto Inc. LI — signals a major directional swing in market share, Ives said.

Price cuts and the Model Y introduction are key to some of the changing market dynamics in China, the analyst said. 

TSLA Price Action: Tesla shares were rallying by 19.53% to $672.94 at last check Tuesday. 

Photo courtesy of Tesla.