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China is a crucial hotspot for Tesla, accounting for 184,800 new cars the company delivered in the first quarter of 2021. Wedbush Analyst, Dan Ives sees an outperformance for the company this fiscal year.
American electric vehicle and clean energy company Tesla Inc (NASDAQ: TSLA) has secured a bullish price rating from investment and asset management firm, Wedbush Securities amidst growing competition in the electric vehicle industry. According to The Street, the shares of the Palo Alto-based automaker is cringing as Chief Executive Officer Elon Musk is reportedly canceling the plans to debut its Model S Plaid+ luxury car version.
The plans for the Plaid Plus initially billed to hit the market by mid-2022 have now been stumped as Elon Musk revealed in a tweet that the Plaid S variant of its high-end cars is just good enough.
Plaid+ is canceled. No need, as Plaid is just so good.
— Elon Musk (@elonmusk) June 6, 2021
Per specifications, the Tesla Model S Plaid was designed to go from 0 to 60 mph in just under 2 seconds. Additionally, the vehicle comes with a top speed of 200 miles per hour and an estimated range of 390 miles. The car has three motors installed, the Plaid powertrain produces 1,020 horsepower. In contrast, the Model S Plaid features a higher horsepower and a longer range. The latest move by Elon Musk indicates perhaps he has chosen for the company’s Plaid Plus prospective customers who will no longer be getting the vehicle if the plans is enacted.
The share price of Tesla closed Monday’s session up 1.01% to $605.13, giving an inclination that investors are amused about Elon’s plans. After hours the stock went down by 0.85%.
Tesla Price Rating amid the Growing Competition in China
China, the world’s largest car market is a crucial hotspot, for Tesla, accounting for 184,800 new cars the company delivered in the first quarter of 2021. Wedbush Analyst, Dan Ives sees an outperformance for the company this fiscal year.
“We believe this year Tesla with a strong 2H can near 900,000 annual deliveries and track towards 1.3 million in 2022 with the Cybertruck adding to the overall EV demand story,” Ives said in a client note. “In a nutshell, competition is increasing from all angles in this EV arms race which has been an overhang over Tesla and the overall sector, however, this is just the start of an EV transformation that will change the auto industry for the coming decades with Tesla leading the charge.”
Reports however have it that Tesla sales in China are dwindling following a ban on the company’s cars ascribed to data spying concerns. This is despite the firm’s efforts to establish its foothold in the country through the creation of data centers dedicated to storing the pieces of information collated from its passenger’s cars. This move has not yet allayed Beijing’s fears with Tesla, a scenario that currently appears to be straining the company’s sales.
Despite other carmakers targeting the EV market including Nio Inc (NYSE: NIO), and Geely Automobile Holdings Ltd (HKG: 0175) amongst others giving Tesla a run for its money, Ives maintains a $1,000 price rating for the American automaker’s stock.
“The main line in the sand now for the bulls and bears is not the near-term chip shortage in our opinion (which is temporary), but rather Tesla’s ability to further penetrate China,” Ives said. “With China a linchpin to Tesla’s global success and its Giga footprint a key advantage, the latest back and forth between Beijing and Tesla have clearly negatively impacted demand for Tesla in China for now.”
According to Ives, Tesla and its frontman, Elon Musk will benefit from not stirring any further agitations with Chinese authorities, a key factor in capturing the over 40% plus market share that the Asian giant will represent by 2022.