Tesla stock fell toward key moving averages Wednesday, with a June China EV sales report due to show how strong Tesla (TSLA) demand is in the key region. The U.S.-based EV giant faces growing competition amid a global chip shortage.
Tesla sales roared back in May after slumping in April. The China Passenger Car Association said Tesla sold 33,463 EVs in May, up 29.5% from 25,845 in April. Tesla sales were 35,478 in March.
Tesla China wholesale sales were 33,463 in May, including 21,936 in domestic sales and 11,527 for export. Tesla’s local sales surged 88% vs. April to 21,936.
“China started off very soft this quarter with a disastrous April performance although steady improvement throughout May and June were key and gives Tesla strong momentum heading into 2H with some of the PR nightmares/safety issues now under control in this key region,” wrote Wedbush analyst Daniel Ives in a June 30 note.
Ives has an outperform rating on Tesla stock and a price target of 1,000.
Tesla set a record for quarterly deliveries, roughly meeting Q2 forecasts. The EV maker reported last week that it delivered 201,250 vehicles worldwide in Q2, up from the prior record of 184,800 in Q1 and 90,900 a year ago.
Tesla this month began long-delayed deliveries of the Model S Plaid, the revamped version of the luxury sedan, but those weren’t expected to ramp up anytime soon. It’s not clear when Model X Plaid deliveries will begin.
China EV Sales
It’s still unclear if Tesla’s recent regulatory issues and consumer backlash in China have affected demand. June China sales may offer the first clear signal on that front, as they largely reflect May orders.
The China Passenger Car Association is expected to release Tesla sales as part of industrywide auto sales data, including for electric vehicles.
Tesla’s China-based rivals reported strong Q2 deliveries last week. Nio (NIO) delivered 8,803 vehicles in June, up 20.4% vs. May. Year over year, June sales surged 116%. Second-quarter deliveries totaled 21,896 electric SUVs, up 112%.
Xpeng (XPEV) delivered 6,565 vehicles in June, up 15% vs. May and jumping 617% vs. a year earlier. Q2 deliveries soared 439% vs. a year earlier to 17,398.
Li Auto (LI) reported June deliveries of 7,713, a 78.4% surge vs. May and 321% vs. a year earlier. Second-quarter deliveries hit 17,575, up 166% vs. a year earlier.
Tesla stock fell 2.3% to 644.65 on the stock market today after sinking to 638.32 intraday. Shares traded tightly after clearing an aggressive trend line that offered an entry near 675, but has fallen back toward its 50-day and 200-day moving averages, according to Leaderboard. Investors might now use 700.10, just above last Friday’s high, as a new aggressive entry.
Investors also could view 780.89 as a less-aggressive early entry, just above the April short-term peak.
Tesla stock is about 28% off its all-time high of 900.40, which it hit intraday on Jan. 25, according to MarketSmith chart analysis.
Its relative strength line is trending downward. Tesla’s RS Rating is 80 out of a possible 99. Its EPS Rating is 74.
Other EV stocks tumbled on Wednesday. Nio stock sank 8.45%. Xpeng dropped 5.9% as it debuted on the Hong Kong exchange. Li Auto fell 4.6%.
China accounts for 30% of Tesla’s sales. It is the second-largest market for the EV maker, behind the U.S.
Global chip and battery shortages have stymied Tesla’s growth plans. Most recently, the company scrapped plans to make a Plaid Plus version of its luxury Model S vehicle.
The Plaid Plus, Cybertruck, Tesla Semi and some future Model Y vehicles were all slated to use 4680 battery cells, which are supposed to offer a big advance in range and cost. Tesla has said mass production of the 4680 battery cells may not occur until 2022.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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