Tesla soared nearly 5% intraday, hitting a two-month high! Barclays: Chinese market may drive deliveries beyond expectations

Tesla's US stocks rose nearly 5% in midday trading on Monday, reaching the highest level in two months, erasing all declines so far this year and turning positive. According to media reports, Barclays analysts expect Tesla's delivery volume in the third quarter to exceed market expectations, coupled with the upcoming launch of Robotaxi next month, which may continue to drive the stock price higher.

The electric car manufacturer's stock rose nearly 5% to a high of $249.70 on Monday morning. In comparison, the S&P 500 rose 0.2%, while the Dow remained flat. Monday's increase allowed Tesla to turn positive for the year by 0.1%.

Tesla's stock closed at $248.48 at the end of 2023, but had dropped to $138.80 in mid-April, with a 44% decline for the year. The stock then rebounded, surpassing $250 before the second-quarter earnings report in July. However, due to lower-than-expected second-quarter performance, the stock fell over 12% on July 24.

Chinese Market Growth to Aid Third-Quarter Deliveries Exceeding Expectations

Barclays analyst Dan Levy believes that based on July's global electric vehicle sales data and August's registration/production data in Europe and China, Tesla's third-quarter delivery volume is estimated to be around 470,000 units, significantly higher than the market's general expectation of 461,000 units.

At the same time, sales growth is also crucial. Levy added that the sales growth in the third quarter is almost entirely driven by the Chinese market. According to official data, Tesla's sales in China had been poor for most of this year, but saw a strong rebound in August.

In contrast, the European market showed weakness. Data indicates that total car sales in Europe declined by about 8% year-on-year in July and August, with electric vehicle sales dropping by about 23%. Tesla's sales in Europe last month dropped by 43.2%. The situation in the U.S. market is much better, with U.S. electric vehicle total sales growing by about 14% year-on-year in July and August according to Ward’s Automotive data.

Tesla is set to announce its third-quarter delivery performance on October 2. Levy also stated that strong delivery data will help maintain positive market sentiment until Tesla releases its Robotaxi autonomous driving rental service on October 10, which can at least avoid potential progress in stock price due to recent fundamental issues.

Robotaxi Could Be a Key Turning Point

Analysts believe that the release of Robotaxi will be a key turning point for Tesla, as the company is shifting from traditional car manufacturing to focusing on autonomous driving technology, partly relying on its Dojo AI supercomputer for support.

Musk is banking the company's future on its ability to solve autonomous driving issues, and he also hopes to expand its Full Self-Driving (FSD) software to Europe and China next year, despite facing a series of regulatory and technological delays in these regionsAt the same time, Goldman Sachs analyst Delaney reiterated his "neutral" rating on Tesla stock and a target price of $230 on Monday, stating that the details provided by Musk at the autonomous taxi launch event are crucial.

"Key areas of focus for investors include the timeline for the commercial operation of robot taxis (including technological readiness and considerations in operations/regulation/logistics) and business prospects (including how Tesla's cost structure compares to competitors)."

He also mentioned that investors have long been anticipating the launch of a new low-cost Tesla model by Musk, which may be on the agenda at the Robotaxi launch event next month: "Whether Tesla will provide more details or release a new low-cost model at the event on October 10th is also a common topic of discussion with investors."