Tesla And Elon Musk 'Need To Play Nice' With Beijing, Wedbush Says On Underwhelming April China Deliveries

Tesla Inc. TSLA and its CEO Elon Musk need to “play nice in the sandbox” with Beijing and smooth out public-relation issues in China that have been a black eye for the automaker over the last month, according to Wedbush analyst Daniel Ives.

The Tesla Analyst: Ives maintained his Outperform rating and $1,000 price target on Tesla. The analyst has a long-term bull case target of $1,300 on the electric vehicle maker.

The Tesla Thesis: Ives noted that Tesla’s April China deliveries saw some softness, with U.S.-China tensions being a key factor.

See Also: How to Invest in Tesla Stock

Tesla’s shares gains in China stagnated versus domestic EV makers such as Nio Inc. NIO, Xpeng Inc. XPEV, and Li Auto Inc. LI in April due to the handful of negative PR issues in China stemming from safety issues, military spy noise, and the protest at the Shanghai Auto Expo, according to Ives.

He added that Tesla's apparent decision not to expand its flagship Shanghai Giga factory due to rising U.S.-China tensions and tariff issues will “raise some questions.”

Further, Ives noted that the chip shortage issues faced by the Palo Alto-based company are putting more pressure on production and logistics to fulfill demand globally.

However, the analyst believes that overall China demand is on a 300,000+ annual run rate and is poised to represent roughly 40% of deliveries for Tesla by 2022. China is the company’s second-largest market after the U.S.

Price Action: Tesla shares closed almost1.9% lower in Monday’s regular trading session at $617.20 and further declined 0.2% in the after-hours session to $615.75.

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