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Tesla warns about China
Tesla reported strong production numbers on its flagship Model 3 sedan, although it warned that new Chinese tariffs will crimp sales in Asia.
The Silicon Valley-based electric-car maker, which, is struggling to emerge from months of turmoil around Chief Executive Elon Musk, delivered a record 83,500 cars, above Wall Street estimates of 80,000.
That included 55,840 deliveries of the mass-market Model 3 sedan, whose ramp-up is widely seen as crucial to the company’s drive to become profitable. Wall Street had expected 55,600.
Still, Tesla’s stock sank more than 3 percent Tuesday, after the company warned that new Chinese tariffs will force it to accelerate investment in its factory in Shanghai.
“The fact that they hit their operational guidance is a positive, but some their commentary around China raised questions about their sales,” CFRA Research analyst Garrett Nelson told The Post. “It appears that their margins are under severe pressure there.”
Tesla said it was speeding up construction of its Shanghai factory as it seeks to combat a huge competitive disadvantage against other producers and even other imported cars, which it said are carrying a lower 15 percent tariff.
“Tesla is now operating at a 55 percent to 60 percent cost disadvantage compared to the exact same car locally produced in China,” the company said.
China gloom aside, CFRA raised its target price for Tesla to $285 from $225 following Musk’s settlement with the Securities and Exchange Commission that allows him to remain CEO. .