According to Cui Dongshu, CPCA’s secretary general, Tesla sales now account for about 30% of the battery electric vehicles sold in China. Ultimately the company plans to produce 150,000 Model 3 sedans from its Shanghai factory.
Indeed, Tesla’s $2 billion Shanghai plant recovered from the coronavirus shutdown faster than peers due to local authority assistance. After resuming operations in February, the factory surpassed its pre-shutdown capacity, making 3,000 cars a week, the company revealed last month.
Meanwhile Tesla recently decided to furlough non-critical employees without pay and temporarily cut executive salaries as much as 30%.
The move is designed to enable the company to conserve funds while the coronavirus pandemic has caused much of its operations to be suspended. According to the company memo, Tesla plans to resume vehicle production on May 4 at its US facilities.
Analysts remain divided on the outlook for TSLA stock. According to TipRanks, the stock has received no less than 10 sell ratings in the last three months vs 15 hold ratings ad 5 buy ratings. The $499 average analyst price target suggests shares could pull back over 9%. (See Tesla’s stock analysis on TipRanks)
Staying on the sidelines, Baird analyst Ben Kallo reiterated his TSLA hold rating and $525 price target on April 6. Following a study of the 2008 recession, and its impact on vehicle demand, he argued that Tesla “may be underestimating potential longer-term ramifications.”
According to Kallo, in 2008 it took ~5 years for peer auto sales to recover to prerecession levels. “That said, we do think TSLA could fare better than luxury peers, with new products/geographies driving growth, a potentially widening EV competitive advantage, and OTA updates keeping vehicles fresh” he added.
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